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 second quarter
ended July 31, 2022.
"Team Purple opened a record 196,000 new HSAs in Q2
and grew Total HSA Assets 33% year-over-year to an industry-leading
$20.5 billion," said Jon Kessler, President and CEO of
HealthEquity. "Sales momentum, macro tailwinds, and a team focused
on remarkable service position us for strong results in fiscal 2023
and beyond."
Second quarter financial
results
Revenue for the second quarter ended July 31,
2022 was $206.1 million, an increase of 9% compared to
$189.1 million for the second quarter ended July 31,
2021. Revenue this quarter included: service revenue of
$103.0 million, custodial revenue of $65.6 million, and
interchange revenue of $37.5 million.
HealthEquity reported a net loss of
$10.7 million, or $0.13 per diluted share, and non-GAAP net
income of $28.1 million, or $0.33 per diluted share, for the
second quarter ended July 31, 2022. The Company reported a net
loss of $3.8 million, or $0.05 per diluted share, and non-GAAP
net income of $33.4 million, or $0.40 per diluted share, for
the second quarter ended July 31, 2021.
Adjusted EBITDA was $67.0 million for the
second quarter ended July 31, 2022, an increase of 2% compared
to the second quarter ended July 31, 2021. Adjusted EBITDA was
33% of revenue, compared to 35% for the fiscal quarter ended
July 31, 2021.
Account and asset metrics
HealthEquity reported sales of 196,000 new HSAs in
the second quarter ended July 31, 2022, compared to 180,000 in
the second quarter ended July 31, 2021. HSAs as of
July 31, 2022 were 7.5 million, an increase of 26% year
over year, including 516,000 HSAs with investments, an increase of
28% year over year. Total Accounts as of July 31, 2022 were
14.5 million, including 7.0 million other
consumer-directed benefits ("CDBs").
Total HSA Assets as of July 31, 2022 were
$20.5 billion, an increase of 33% year over year. Total HSA
Assets included $13.1 billion of HSA cash and
$7.4 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
$0.8 billion as of July 31, 2022.
Business outlook
For the fiscal year ending January 31, 2023,
management expects revenues of $834 million to $844 million. Its
outlook for net loss is between $43 million and $36 million,
resulting in net loss of $0.51 to $0.43 per diluted share. Its
outlook for non-GAAP net income, calculated using the method
described below, is between $103 million and $111 million,
resulting in non-GAAP net income per diluted share of $1.23 to
$1.32 (based on an estimated 84 million diluted weighted-average
shares outstanding). Management expects Adjusted EBITDA of $252
million to $262 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, September 6, 2022 to
discuss the second quarter 2023 financial results. 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 adjusted 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 consumer-directed benefits for our more than 14 million
accounts 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 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:
- the impact of societal
and economic changes arising out of the 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 recent and future acquisitions with our business
successfully;
- 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;
- 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; 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, 2022, our Quarterly Report on Form 10-Q for the quarter ended
April 30, 2022, 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
Putnam801-727-1209rputnam@healthequity.com
HealthEquity, Inc. and its
subsidiariesCondensed consolidated balance
sheets
(in thousands, except par value) |
July 31, 2022 |
|
January 31, 2022 |
|
(unaudited) |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
176,886 |
|
$ |
225,414 |
Accounts receivable, net of allowance for doubtful accounts of
$6,215 and $6,228 as of July 31, 2022 and January 31, 2022,
respectively |
|
90,426 |
|
|
87,428 |
Other current assets |
|
41,274 |
|
|
38,495 |
Total current assets |
|
308,586 |
|
|
351,337 |
Property and equipment, net |
|
18,028 |
|
|
23,372 |
Operating lease right-of-use assets |
|
60,588 |
|
|
63,613 |
Intangible assets, net |
|
991,945 |
|
|
973,137 |
Goodwill |
|
1,645,999 |
|
|
1,645,836 |
Other assets |
|
48,878 |
|
|
49,807 |
Total assets |
$ |
3,074,024 |
|
$ |
3,107,102 |
Liabilities and stockholders’ equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
15,841 |
|
$ |
27,541 |
Accrued compensation |
|
41,989 |
|
|
47,136 |
Accrued liabilities |
|
43,287 |
|
|
57,589 |
Current portion of long-term debt |
|
13,125 |
|
|
8,750 |
Operating lease liabilities |
|
11,275 |
|
|
12,171 |
Total current liabilities |
|
125,517 |
|
|
153,187 |
Long-term liabilities |
|
|
|
Long-term debt, net |
|
914,966 |
|
|
922,077 |
Operating lease liabilities, non-current |
|
62,626 |
|
|
65,232 |
Other long-term liabilities |
|
13,731 |
|
|
14,185 |
Deferred tax liability |
|
92,288 |
|
|
99,846 |
Total long-term liabilities |
|
1,083,611 |
|
|
1,101,340 |
Total liabilities |
|
1,209,128 |
|
|
1,254,527 |
Commitments and contingencies |
|
|
|
Stockholders’ equity |
|
|
|
Preferred stock, $0.0001 par value, 100,000 shares authorized, no
shares issued and outstanding as of July 31, 2022 and January 31,
2022, respectively |
|
— |
|
|
— |
Common stock, $0.0001 par value, 900,000 shares authorized, 84,526
and 83,780 shares issued and outstanding as of July 31, 2022 and
January 31, 2022, respectively |
|
8 |
|
|
8 |
Additional paid-in capital |
|
1,713,122 |
|
|
1,676,508 |
Accumulated earnings |
|
151,766 |
|
|
176,059 |
Total stockholders’ equity |
|
1,864,896 |
|
|
1,852,575 |
Total liabilities and stockholders’ equity |
$ |
3,074,024 |
|
$ |
3,107,102 |
HealthEquity, Inc. and its
subsidiariesCondensed consolidated statements of
operations and comprehensive loss (unaudited)
|
Three months ended July 31, |
|
Six months ended July 31, |
(in thousands, except per share data) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
Service revenue |
$ |
103,034 |
|
|
$ |
109,182 |
|
|
$ |
207,382 |
|
|
$ |
211,716 |
|
Custodial revenue |
|
65,599 |
|
|
|
48,776 |
|
|
|
124,964 |
|
|
|
95,754 |
|
Interchange revenue |
|
37,509 |
|
|
|
31,145 |
|
|
|
79,475 |
|
|
|
65,835 |
|
Total revenue |
|
206,142 |
|
|
|
189,103 |
|
|
|
411,821 |
|
|
|
373,305 |
|
Cost of revenue |
|
|
|
|
|
|
|
Service costs |
|
74,914 |
|
|
|
67,334 |
|
|
|
155,788 |
|
|
|
137,966 |
|
Custodial costs |
|
7,090 |
|
|
|
4,824 |
|
|
|
13,731 |
|
|
|
9,833 |
|
Interchange costs |
|
6,326 |
|
|
|
4,974 |
|
|
|
13,317 |
|
|
|
10,419 |
|
Total cost of revenue |
|
88,330 |
|
|
|
77,132 |
|
|
|
182,836 |
|
|
|
158,218 |
|
Gross profit |
|
117,812 |
|
|
|
111,971 |
|
|
|
228,985 |
|
|
|
215,087 |
|
Operating expenses |
|
|
|
|
|
|
|
Sales and marketing |
|
15,843 |
|
|
|
15,476 |
|
|
|
32,403 |
|
|
|
29,562 |
|
Technology and development |
|
46,580 |
|
|
|
37,898 |
|
|
|
91,763 |
|
|
|
73,367 |
|
General and administrative |
|
25,937 |
|
|
|
22,812 |
|
|
|
49,664 |
|
|
|
43,499 |
|
Amortization of acquired intangible assets |
|
24,181 |
|
|
|
20,289 |
|
|
|
47,879 |
|
|
|
40,103 |
|
Merger integration |
|
7,683 |
|
|
|
16,371 |
|
|
|
16,977 |
|
|
|
25,178 |
|
Total operating expenses |
|
120,224 |
|
|
|
112,846 |
|
|
|
238,686 |
|
|
|
211,709 |
|
Income (loss) from operations |
|
(2,412 |
) |
|
|
(875 |
) |
|
|
(9,701 |
) |
|
|
3,378 |
|
Other expense |
|
|
|
|
|
|
|
Interest expense |
|
(11,493 |
) |
|
|
(7,254 |
) |
|
|
(21,954 |
) |
|
|
(13,943 |
) |
Other income (expense), net |
|
32 |
|
|
|
344 |
|
|
|
(269 |
) |
|
|
(3,286 |
) |
Total other expense |
|
(11,461 |
) |
|
|
(6,910 |
) |
|
|
(22,223 |
) |
|
|
(17,229 |
) |
Loss before income taxes |
|
(13,873 |
) |
|
|
(7,785 |
) |
|
|
(31,924 |
) |
|
|
(13,851 |
) |
Income tax benefit |
|
(3,219 |
) |
|
|
(3,967 |
) |
|
|
(7,631 |
) |
|
|
(7,418 |
) |
Net loss and comprehensive loss |
$ |
(10,654 |
) |
|
$ |
(3,818 |
) |
|
$ |
(24,293 |
) |
|
$ |
(6,433 |
) |
Net loss per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.13 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.08 |
) |
Diluted |
$ |
(0.13 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.08 |
) |
Weighted-average number of shares used in computing net loss per
share: |
|
|
|
|
|
|
|
Basic |
|
84,443 |
|
|
|
83,481 |
|
|
|
84,236 |
|
|
|
82,628 |
|
Diluted |
|
84,443 |
|
|
|
83,481 |
|
|
|
84,236 |
|
|
|
82,628 |
|
HealthEquity, Inc. and its
subsidiariesCondensed consolidated statements of
cash flows (unaudited)
|
Six months ended July 31, |
(in thousands) |
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(24,293 |
) |
|
$ |
(6,433 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
80,226 |
|
|
|
64,819 |
|
Stock-based compensation |
|
32,140 |
|
|
|
28,416 |
|
Amortization of debt discount and issuance costs |
|
1,639 |
|
|
|
2,482 |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
1,011 |
|
Other non-cash items |
|
269 |
|
|
|
(752 |
) |
Deferred taxes |
|
(7,558 |
) |
|
|
(4,051 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
|
(3,161 |
) |
|
|
(230 |
) |
Other assets |
|
(1,546 |
) |
|
|
20,636 |
|
Operating lease right-of-use assets |
|
4,117 |
|
|
|
6,060 |
|
Accrued compensation |
|
(4,973 |
) |
|
|
(10,639 |
) |
Accounts payable, accrued liabilities, and other current
liabilities |
|
(25,586 |
) |
|
|
(30,213 |
) |
Operating lease liabilities, non-current |
|
(3,594 |
) |
|
|
(4,556 |
) |
Other long-term liabilities |
|
(454 |
) |
|
|
1,616 |
|
Net cash provided by operating activities |
|
47,226 |
|
|
|
68,166 |
|
Cash flows from investing activities: |
|
|
|
Purchases of software and capitalized software development
costs |
|
(24,215 |
) |
|
|
(32,097 |
) |
Purchases of property and equipment |
|
(2,384 |
) |
|
|
(6,352 |
) |
Acquisition of intangible member assets |
|
(68,725 |
) |
|
|
(2,653 |
) |
Acquisitions, net of cash acquired |
|
— |
|
|
|
(49,533 |
) |
Proceeds from sale of equity securities |
|
— |
|
|
|
2,367 |
|
Net cash used in investing activities |
|
(95,324 |
) |
|
|
(88,268 |
) |
Cash flows from financing activities: |
|
|
|
Principal payments on long-term debt |
|
(4,375 |
) |
|
|
(15,625 |
) |
Settlement of client-held funds obligation, net |
|
(991 |
) |
|
|
(2,636 |
) |
Proceeds from exercise of common stock options |
|
4,936 |
|
|
|
6,672 |
|
Proceeds from follow-on equity offering, net of payments for
offering costs |
|
— |
|
|
|
456,642 |
|
Net cash provided by (used in) financing activities |
|
(430 |
) |
|
|
445,053 |
|
Increase (decrease) in cash and cash equivalents |
|
(48,528 |
) |
|
|
424,951 |
|
Beginning cash and cash equivalents |
|
225,414 |
|
|
|
328,803 |
|
Ending cash and cash equivalents |
$ |
176,886 |
|
|
$ |
753,754 |
|
HealthEquity, Inc. and its
subsidiariesCondensed consolidated statements of
cash flows (unaudited) (continued)
|
Six months ended July 31, |
(in thousands) |
|
2022 |
|
|
2021 |
|
Supplemental cash flow data: |
|
|
|
Interest expense paid in cash |
$ |
19,450 |
|
$ |
9,838 |
|
Income tax payments (refunds), net |
|
573 |
|
|
(5,545 |
) |
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 |
|
5,040 |
|
|
4,077 |
|
Purchases of property and equipment included in accounts payable or
accrued liabilities |
|
356 |
|
|
357 |
|
Purchases of intangible member assets included in accounts payable
or accrued liabilities |
|
1,849 |
|
|
— |
|
Contingent consideration recognized at acquisition |
|
— |
|
|
8,147 |
|
Exercise of common stock options receivable |
|
8 |
|
|
119 |
|
Increase in goodwill due to measurement period adjustments,
net |
|
163 |
|
|
— |
|
Stock-based compensation expense
(unaudited)
Total stock-based compensation expense included in
the condensed consolidated statements of operations and
comprehensive loss is as follows:
|
Three months ended July 31, |
|
Six months ended July 31, |
(in thousands) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Cost of revenue |
$ |
3,998 |
|
$ |
3,068 |
|
$ |
7,005 |
|
$ |
5,471 |
Sales and marketing |
|
2,553 |
|
|
2,660 |
|
|
4,567 |
|
|
4,848 |
Technology and development |
|
2,963 |
|
|
3,693 |
|
|
6,343 |
|
|
6,706 |
General and administrative |
|
8,640 |
|
|
6,196 |
|
|
14,225 |
|
|
11,391 |
Other expense, net (1) |
|
— |
|
|
— |
|
|
— |
|
|
342 |
Total stock-based compensation expense |
$ |
18,154 |
|
$ |
15,617 |
|
$ |
32,140 |
|
$ |
28,758 |
(1) Equity-based awards exchanged
for cash in connection with the Luum acquisition.
Total Accounts (unaudited)
(in thousands, except percentages) |
July 31, 2022 |
|
July 31, 2021 |
|
% Change |
|
January 31, 2022 |
HSAs |
7,523 |
|
5,972 |
|
26% |
|
7,207 |
New HSAs from sales - Quarter-to-date |
196 |
|
180 |
|
9% |
|
472 |
New HSAs from sales - Year-to-date |
355 |
|
295 |
|
20% |
|
918 |
New HSAs from acquisitions - Year-to-date |
90 |
|
— |
|
n/a |
|
740 |
HSAs with investments |
516 |
|
402 |
|
28% |
|
455 |
CDBs |
7,023 |
|
7,171 |
|
(2)% |
|
7,192 |
Total Accounts |
14,546 |
|
13,143 |
|
11% |
|
14,399 |
Average Total Accounts - Quarter-to-date |
14,497 |
|
13,358 |
|
9% |
|
14,326 |
Average Total Accounts - Year-to-date |
14,462 |
|
13,114 |
|
10% |
|
13,450 |
HSA Assets (unaudited)
(in millions, except percentages) |
July 31, 2022 |
|
July 31, 2021 |
|
% Change |
|
January 31, 2022 |
HSA cash |
$ |
13,097 |
|
$ |
10,028 |
|
31% |
|
$ |
12,943 |
HSA investments |
|
7,441 |
|
|
5,443 |
|
37% |
|
|
6,675 |
Total HSA Assets |
|
20,538 |
|
|
15,471 |
|
33% |
|
|
19,618 |
Average daily HSA cash - Year-to-date |
|
12,924 |
|
|
10,007 |
|
29% |
|
|
10,579 |
Average daily HSA cash - Quarter-to-date |
|
12,941 |
|
|
9,963 |
|
30% |
|
|
12,118 |
Client-held funds (unaudited)
(in millions, except percentages) |
July 31, 2022 |
|
July 31, 2021 |
|
% Change |
|
January 31, 2022 |
Client-held funds |
$ |
801 |
|
$ |
810 |
|
(1)% |
|
$ |
897 |
Average daily Client-held funds - Year-to-date |
|
852 |
|
|
876 |
|
(3)% |
|
|
842 |
Average daily Client-held funds - Quarter-to-date |
|
839 |
|
|
853 |
|
(2)% |
|
|
822 |
Reconciliation of net loss to Adjusted
EBITDA (unaudited)
|
Three months ended July 31, |
|
Six months ended July 31, |
(in thousands) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net loss |
$ |
(10,654 |
) |
|
$ |
(3,818 |
) |
|
$ |
(24,293 |
) |
|
$ |
(6,433 |
) |
Interest income |
|
(89 |
) |
|
|
(533 |
) |
|
|
(141 |
) |
|
|
(941 |
) |
Interest expense |
|
11,493 |
|
|
|
7,254 |
|
|
|
21,954 |
|
|
|
13,943 |
|
Income tax benefit |
|
(3,219 |
) |
|
|
(3,967 |
) |
|
|
(7,631 |
) |
|
|
(7,418 |
) |
Depreciation and amortization |
|
16,559 |
|
|
|
12,762 |
|
|
|
32,347 |
|
|
|
24,716 |
|
Amortization of acquired intangible assets |
|
24,181 |
|
|
|
20,289 |
|
|
|
47,879 |
|
|
|
40,103 |
|
Stock-based compensation expense |
|
18,154 |
|
|
|
15,617 |
|
|
|
32,140 |
|
|
|
28,416 |
|
Merger integration expenses |
|
7,683 |
|
|
|
16,371 |
|
|
|
16,977 |
|
|
|
25,178 |
|
Acquisition costs (1) |
|
47 |
|
|
|
1,665 |
|
|
|
53 |
|
|
|
7,604 |
|
Gain on equity securities |
|
— |
|
|
|
(1,677 |
) |
|
|
— |
|
|
|
(1,677 |
) |
Amortization of incremental costs to obtain a contract |
|
1,074 |
|
|
|
1,352 |
|
|
|
2,142 |
|
|
|
2,624 |
|
Costs associated with unused office space |
|
1,313 |
|
|
|
— |
|
|
|
2,607 |
|
|
|
— |
|
Other |
|
501 |
|
|
|
200 |
|
|
|
1,345 |
|
|
|
(1,625 |
) |
Adjusted EBITDA |
$ |
67,043 |
|
|
$ |
65,515 |
|
|
$ |
125,379 |
|
|
$ |
124,490 |
|
(1) For the six months ended
July 31, 2021, acquisition costs included $0.3 million of
stock-based compensation expense.
Reconciliation of net loss outlook to
Adjusted EBITDA outlook (unaudited)
|
Outlook for the year ending |
(in millions) |
January 31, 2023 |
Net loss |
$(43) - (36) |
Interest expense |
46 |
Income tax benefit |
(15) - (12) |
Depreciation and amortization |
64 |
Amortization of acquired intangible assets |
97 |
Stock-based compensation expense |
67 |
Merger integration expenses |
27 |
Amortization of incremental costs to obtain a contract |
4 |
Costs associated with unused office space |
5 |
Adjusted EBITDA |
$252 - 262 |
Reconciliation of net loss to non-GAAP net
income (unaudited)
|
Three months ended July 31, |
|
Six months ended July 31, |
(in thousands, except per share data) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net loss |
$ |
(10,654 |
) |
|
$ |
(3,818 |
) |
|
$ |
(24,293 |
) |
|
$ |
(6,433 |
) |
Income tax benefit |
|
(3,219 |
) |
|
|
(3,967 |
) |
|
|
(7,631 |
) |
|
|
(7,418 |
) |
Loss before income taxes - GAAP |
|
(13,873 |
) |
|
|
(7,785 |
) |
|
|
(31,924 |
) |
|
|
(13,851 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Amortization of acquired intangible assets |
|
24,181 |
|
|
|
20,289 |
|
|
|
47,879 |
|
|
|
40,103 |
|
Stock-based compensation expense |
|
18,154 |
|
|
|
15,617 |
|
|
|
32,140 |
|
|
|
28,416 |
|
Merger integration expenses |
|
7,683 |
|
|
|
16,371 |
|
|
|
16,977 |
|
|
|
25,178 |
|
Acquisition costs |
|
47 |
|
|
|
1,665 |
|
|
|
53 |
|
|
|
7,604 |
|
Gain on equity securities |
|
— |
|
|
|
(1,677 |
) |
|
|
— |
|
|
|
(1,677 |
) |
Costs associated with unused office space |
|
1,313 |
|
|
|
— |
|
|
|
2,607 |
|
|
|
— |
|
Total adjustments to loss before income taxes - GAAP |
|
51,378 |
|
|
|
52,265 |
|
|
|
99,656 |
|
|
|
99,624 |
|
Income before income taxes - Non-GAAP |
|
37,505 |
|
|
|
44,480 |
|
|
|
67,732 |
|
|
|
85,773 |
|
Income tax provision - Non-GAAP (1) |
|
9,376 |
|
|
|
11,120 |
|
|
|
16,933 |
|
|
|
21,443 |
|
Non-GAAP net income |
|
28,129 |
|
|
|
33,360 |
|
|
|
50,799 |
|
|
|
64,330 |
|
|
|
|
|
|
|
|
|
Diluted weighted-average shares |
|
84,443 |
|
|
|
83,481 |
|
|
|
84,236 |
|
|
|
82,628 |
|
Non-GAAP net income per diluted share |
$ |
0.33 |
|
|
$ |
0.40 |
|
|
$ |
0.60 |
|
|
$ |
0.78 |
|
(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 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 loss outlook to
non-GAAP net income outlook (unaudited)
|
Outlook for the year ending |
(in millions, except per share data) |
January 31, 2023 |
Net loss |
$(43) - (36) |
Income tax benefit |
(15) - (12) |
Loss before income taxes - GAAP |
(58) - (48) |
Non-GAAP adjustments: |
|
Amortization of acquired intangible assets |
97 |
Stock-based compensation expense |
67 |
Merger integration expenses |
27 |
Costs associated with unused office space |
5 |
Total adjustments to loss before income taxes - GAAP |
196 |
Income before income taxes - Non-GAAP |
138 - 148 |
Income tax provision - Non-GAAP (1) |
35 - 37 |
Non-GAAP net income |
$103 - 111 |
|
|
Diluted weighted-average shares |
84 |
Non-GAAP net income per diluted share (2) |
$1.23 - 1.32 |
(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 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.
(2) Non-GAAP net income per
diluted share may not calculate due to rounding of non-GAAP net
income and diluted weighted-average shares.
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 |
Adjusted 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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