HEALTHEQUITY INC
For the period ended Apr 30, 2025. Filed Jun 3, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 30, 2025 · Filed Jun 3, 2025
HQY$103.63+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-10-31; filed 2024-12-09.
0001428336-24-000110
Item 2. Management's discussion and analysis of financial condition and results of operationsCurrent report: 10-Q
Period ended 2025-04-30; filed 2025-06-03.
0001428336-25-000022
Item 2. Management's discussion and analysis of financial condition and results of operationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 179 previous paragraphs and 159 current paragraphs.
91 unchanged; 57 reworded; 6 added; 21 removed; 10 previous and 5 current paragraphs rearranged.
Tables are not compared: 14 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
In fiscal 2025, we acquired the BenefitWallet HSA portfolio, comprised of approximately 616,000 HSAs plus other accounts with $2.7 billion of HSA Assets, from Conduent Business Services, LLC for a purchase price of $425.0 million. We paid the purchase price using $225.0 million of borrowings under our revolving credit facility, with the remainder paid using cash on hand.
Current report
Interest expense
Current report
On an annual basis, relative to the fiscal year ended January 31, 2025, we expect service costs to decrease as a result of our technology investments in security and further operational efficiencies, partially offset by costs resulting from an increase in Total Accounts.
Current report
On an annual basis, we expect merger integration expense to continue to decrease as we complete the remaining merger integration activities.
Current report
Interest expense
Current report
As of April 30, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.
Removed paragraphs (21)
Previous report
In September 2023, we entered into an agreement to acquire the BenefitWallet HSA portfolio from Conduent Business Services, LLC ("Conduent"). The transfer closed in a series of three tranches, as presented in the following table:
Previous report
The BenefitWallet HSA portfolio acquisition was accounted for as an asset acquisition, and related acquisition costs were capitalized as part of the cost of the asset, which is included within intangible assets, net, on our condensed consolidated balance sheet. We capitalized $27.2 million of transaction costs associated with the acquisition during the nine months ended October 31, 2024, which includes the reimbursement of $20.0 million of Conduent's transfer-related expenses. In addition, in May 2024, we assumed a contract with a Depository Partner representing approximately 7% of the total HSA Assets added through the acquisition, which provides a custodial yield that is below current market rates and expires in June 2026. We recorded deferred revenue of $20.3 million in May 2024 as a result of the assumed contract, which will be recorded as an increase to custodial revenue over the life of the assumed contract.
Previous report
Our Adjusted EBITDA increased by $93.6 million, or 35%, from the nine months ended October 31, 2023 to the nine months ended October 31, 2024, primarily due to an increase in total revenue, partially offset by increases in personnel-related costs and professional fees.
Previous report
Our non-GAAP net income increased by $75.5 million, or 54%, from the nine months ended October 31, 2023 to the nine months ended October 31, 2024, primarily due to an increase in total revenue, partially offset by increases in personnel-related costs and professional fees.
Previous report
Comparison of the three and nine months ended October 31, 2024 and 2023
Previous report
Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The reclassifications relate primarily to recordkeeping and advisory fees associated with HSA investments, which were reclassified from custodial revenue to service revenue to better align our financial statement presentation with the underlying drivers of our revenue streams. We also reclassified certain immaterial personnel-related costs from custodial costs to service costs or general and administrative costs. The reclassifications had no impact on our total revenue, income from operations, net income, cash flows, or stockholders' equity. The following table presents the impact of the reclassifications:
Previous report
The $17.0 million, or 5%, increase in service revenue from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to the increases in the number of HSAs and the amount of HSA investments, partially offset by lower average service fees per account.
Previous report
The $120.1 million, or 43%, increase in custodial revenue from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to an increase in average annualized yield on HSA cash from 2.42% for the nine months ended October 31, 2023 to 3.07% for the nine months ended October 31, 2024 (due to
Previous report
Total revenue increased $150.8 million, or 20%, from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 due to the increases in custodial, service, and interchange revenues, described above.
Previous report
The $12.6 million, or 5%, increase in service costs from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to costs incurred to reimburse and protect members from outside fraud activity, as well as increases in costs to support the increase in Total Accounts and member interactions, partially offset by efficiencies resulting from our technology investments.
Previous report
The $5.3 million, or 22%, increase in custodial costs from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to the $2.0 billion, or 15%, increase in the year-over-year average daily balance of HSA cash, as described above, an increase in fees charged by our Depository Partners, and an increase in the average annualized rate of interest retained by HSA members on HSA cash from 0.22% during the nine months ended October 31, 2023 to 0.23% during the nine months ended October 31, 2024.
Previous report
Interchange costs. The $18 thousand, or less than 1%, increase in interchange costs from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to an increase in Total Accounts and certain costs associated with our transition to a single card processor, which transition was completed in August 2024, largely offset by efficiencies resulting from the transition to a single card processor.
Previous report
The $8.9 million, or 15%, increase in sales and marketing expenses from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to an increase in personnel-related expenses.
Previous report
The $11.3 million, or 7%, increase in technology and development expenses from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to increases in personnel-related expenses and software costs.
Previous report
The $21.8 million, or 27%, increase in general and administrative expenses from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to increases in professional services expense and accelerated stock-based compensation expense recognized with respect to certain performance restricted stock units granted during the current fiscal year, as described in Note 8—Stock-based compensation.
Previous report
We expect merger integration expenses attributable to the Further acquisition totaling approximately $55 million to be incurred over a period of approximately five to six years from the date of the acquisition, which occurred in November 2021.
Previous report
The $3.6 million, or 9%, increase in interest expense from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to a higher average principal balance and a $0.4 million increase in losses on extinguishment of debt. The increase was partially offset by a lower average interest rate on borrowings with variable interest rate terms.
Previous report
On August 23, 2024, we entered into a credit agreement (the "Credit Agreement") pursuant to which the Company established a new five-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $1.0 billion, a portion of which was used to repay all outstanding obligations under our prior credit agreement (the "Prior Credit Agreement").
Previous report
During the nine months ended October 31, 2024, we used $452.2 million of cash, which includes $225.0 million borrowed under our Prior Revolving Credit Facility, to pay for the BenefitWallet HSA portfolio acquisition.
Previous report
In August 2024, in connection with our entry into the Credit Agreement, we repaid all outstanding obligations in the amount of $511.9 million under the Prior Credit Agreement and terminated all commitments thereunder. In October 2024, we prepaid $25.0 million under the Credit Agreement.
Previous report
As of October 31, 2024, other than outstanding letters of credit issued under our Revolving Credit Facility, we did not have any off-balance sheet arrangements. Our letters of credit generally expire within one year. However, in the ordinary course of business, we will continue to renew or modify the terms of the letters of credit to support business requirements. The letters of credit are contingent liabilities, supported by our Revolving Credit Facility, and are not reflected on our condensed consolidated balance sheets.
Reworded paragraphs (57)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. Such statements include, but are not limited to, statements concerning our ability to integrate acquired businesses, the anticipated synergies and other benefits of acquired businesses and any future acquisitions, health savings accounts and other tax-advantaged consumer-directed benefits, tax and other regulatory changes, market opportunity, our future financial and operating results, our investment and acquisition strategy, our sales and marketing strategy, management’s plans, beliefs and objectives for future operations, technology and development, economic and industry trends or trend analysis, expectations about seasonality, opportunity for portfolio purchases and other acquisitions, operating expenses, anticipated income tax rates, capital expenditures, cash flows and liquidity. These statements are based on the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, our Quarterly Report on Form 10-Q for the period ended July 31, 2024, this Quarterly Report on Form 10-Q and our other reports filed with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such events.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. Such statements include, but are not limited to, statements concerning our ability to integrate acquired businesses, the anticipated synergies and other benefits of acquired businesses and any future acquisitions, health savings accounts and other tax-advantaged consumer-directed benefits, tax and other regulatory changes, market opportunity, our future financial and operating results, our investment and acquisition strategy, our sales and marketing strategy, management’s plans, beliefs and objectives for future operations, technology and development, economic and industry trends or trend analysis, expectations about seasonality, opportunity for portfolio purchases and other acquisitions, operating expenses, anticipated income tax rates, capital expenditures, cash flows and liquidity. These statements are based on the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and our other reports filed with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such events.
Previous wording
The core of our offerings is the HSA, a financial account through which consumers spend and save long-term for healthcare expenses on a tax-advantaged basis. As of October 31, 2024, we administered 9.5 million HSAs, with balances totaling $30.0 billion, which we call HSA Assets, as well as 7.0 million complementary CDBs. We refer to the aggregate number of HSAs and other CDBs that we administer as Total Accounts, of which we had 16.5 million as of October 31, 2024.
Current wording
The core of our offerings is the HSA, a financial account through which consumers spend and save long-term for healthcare expenses on a tax-advantaged basis. As of April 30, 2025, we administered 9.9 million HSAs, with balances totaling $31.3 billion, which we call HSA Assets, as well as 7.2 million complementary CDBs. We refer to the aggregate number of HSAs and other CDBs that we administer as Total Accounts, of which we had 17.1 million as of April 30, 2025.
Previous wording
We have increased our share of the growing HSA market from 4% in December 2010 to 21% as of June 2024, measured by HSA Assets. According to Devenir, as of June 2024, we were the largest HSA provider by both accounts and HSA Assets. In addition, we believe we are the largest provider of other CDBs. We seek to differentiate ourselves through our service-driven culture, product breadth, ecosystem connectivity, and proprietary technology. Our proprietary technology allows us to help consumers optimize the value of their HSAs and other CDBs and gain confidence and skills in managing their healthcare costs as part of their financial security.
Current wording
We have increased our share of the growing HSA market from 4% in December 2010 to 21% as of December 2024, measured by HSA Assets. According to the 2024 Year-End Devenir HSA Research Report, as of December 2024, we were the largest HSA provider by number of accounts and the second largest HSA provider by HSA Assets. In addition, we believe we are the largest provider of other CDBs. We seek to differentiate ourselves through our service-driven culture, product breadth, ecosystem connectivity, and proprietary technology. Our proprietary technology allows us to help consumers optimize the value of their HSAs and other CDBs and gain confidence and skills in managing their healthcare costs as part of their financial security.
Previous wording
We believe that our future performance will be driven by a number of factors, including those identified below. Each of these factors presents both significant opportunities and significant risks to our future performance. See also the section entitled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, this Quarterly Report on Form 10-Q and our other reports filed with the SEC.
Current wording
We believe that our future performance will be driven by a number of factors, including those identified below. Each of these factors presents both significant opportunities and significant risks to our future performance. See also the section entitled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and our other reports filed with the SEC.
Previous wording
We derive revenue primarily from healthcare-related saving and spending by consumers in the U.S., which are driven by changes in the broader healthcare industry, including the structure of health insurance. The average family premium for employer-sponsored health insurance has risen by 22% since 2018 and 47% since 2013, resulting in increased participation in HSA-qualified health plans and HSAs and increased consumer cost-sharing in health insurance more generally. We believe that continued growth in healthcare costs and related factors will spur continued growth in HSA-qualified health plans and HSAs and may encourage policy changes making HSAs or
Current wording
We derive revenue primarily from healthcare-related saving and spending by consumers in the U.S., which are driven by changes in the broader healthcare industry, including the structure of health insurance. The average family premium for employer-sponsored health insurance has risen by 24% since 2019 and 52% since 2014, resulting in increased participation in HSA-qualified health plans and HSAs and increased consumer cost-sharing in health insurance more generally. We believe that continued growth in healthcare costs and related factors will spur continued growth in HSA-qualified health plans and HSAs and may encourage policy changes making HSAs or similar vehicles available to new populations such as individuals in Medicare. However, the timing and impact of these and other developments in U.S. healthcare are uncertain. Moreover, changes in healthcare policy, such as "Medicare for all" plans, could materially and adversely affect our business in ways that are difficult to predict.
Previous wording
We believe we have a diverse distribution footprint to attract new Clients and Network Partners. Our sales force calls on enterprise and regional employers in industries across the U.S., as well as potential Network Partners from among health plans, benefits administrators, and retirement plan record keepers. Our Network Partners are a key channel through which we gain access to Clients and members. Our Network Partners collectively employ thousands of sales representatives and account managers who promote both the Network Partners' products and our products and services. Our sales representatives and account management teams work with and train the sales representatives and account management teams of our Network Partners.
Current wording
-18- channel through which we gain access to Clients and members. Our Network Partners collectively employ thousands of sales representatives and account managers who promote both the Network Partners' products and our products and services. Our sales representatives and account management teams work with and train the sales representatives and account management teams of our Network Partners.
Previous wording
We are the largest custodian and administrator of HSAs, as well as a market-share leader in each of the major categories of complementary CDBs, including FSAs and HRAs, COBRA and commuter benefits administration. Our Clients and their benefits advisors increasingly seek HSA providers that can deliver an integrated offering of HSAs and complementary CDBs. With our CDB capabilities, we can provide employers with a single partner for both HSAs and complementary CDBs, which is preferred by the vast majority of employers, according to research conducted for us by Aite Group. We believe that the combination of HSA and complementary CDB offerings significantly strengthens our value proposition to employers, health benefits brokers and consultants, and Network Partners as a leading single-source provider.
Current wording
We are a market-share leader in the administration of HSAs and each of the major categories of complementary CDBs, including FSAs and HRAs, COBRA and commuter benefits. Our Clients and their benefits advisors increasingly seek HSA providers that can deliver an integrated offering of HSAs and complementary CDBs. With our CDB capabilities, we can provide employers with a single partner for both HSAs and complementary CDBs, which is preferred by the vast majority of employers, according to research conducted for us by Aite Group. We believe that the combination of HSA and complementary CDB offerings significantly strengthens our value proposition to employers, health benefits brokers and consultants, and Network Partners as a leading single-source provider.
Previous wording
We believe that increased participation in our Enhanced Rates offering, diversification of Depository Partners and insurance company partners, varied contract terms, and other factors reduce our exposure to short-term fluctuations in prevailing interest rates and mitigate the short-term impact of sustained increases or declines in prevailing
Current wording
We believe that increased participation in our Enhanced Rates offering, diversification of Depository Partners and insurance company partners, varied contract terms, and other factors reduce our exposure to short-term fluctuations in prevailing interest rates and mitigate the short-term impact of sustained increases or declines in prevailing interest rates on our custodial revenue. Over longer periods, sustained shifts in prevailing interest rates affect the amount of custodial revenue we can realize on custodial assets and the interest retained by our members.
Previous wording
We believe that innovations incorporated in our technology differentiate us from our competitors and help drive our growth by enabling us to better assist consumers to make healthcare saving and spending decisions and maximize the value of their tax-advantaged benefits. Our full suite of CDB offerings complements our HSA solution and enhances our leadership position within the HSA sector. We are currently investing in a significant modernization of our proprietary technology platforms to support new opportunities and enhance security, privacy and platform infrastructure, while maintaining existing applications, features, and services. For example, we are making significant investments in the architecture and infrastructure of the technology that we use to provide our services to improve our transaction processing capabilities and support continued account and transaction growth, as well as in data-driven personalized engagement to help our members spend less, save more, and build wealth for retirement. In addition, we are investing in technology solutions to meet the evolving needs of our members, Clients and Network Partners. Our current innovation efforts include, among others, increasing member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through AI tools, leveraging stacked cards, and mobile wallet.
Current wording
We believe that innovations incorporated in our technology differentiate us from our competitors and help drive our growth by enabling us to better assist consumers to make healthcare saving and spending decisions and maximize the value of their tax-advantaged benefits. Our full suite of CDB offerings complements our HSA solution and enhances our leadership position within the HSA sector. We are currently investing in a modernization of our proprietary technology platforms to support new opportunities and enhance security, privacy and platform infrastructure, while maintaining existing applications, features, and services. For example, we are making investments in the architecture and infrastructure of the technology that we use to provide our services to improve our transaction processing capabilities and support continued account and transaction growth, as well as in data-driven personalized engagement to help our members spend less, save more, and build wealth for retirement. In addition, we are investing in technology solutions to meet the evolving needs of our members, Clients and Network Partners. Our current innovation efforts include, among others, increasing member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through AI tools including the Expedited Claims tool, leveraging chip-enabled stacked cards, and mobile wallet.
Previous wording
Our direct competitors are HSA custodians and other CDB providers. Many of these are state or federally chartered banks and other financial institutions for which we believe benefits administration services are not a core business. Some of our direct competitors (including healthcare service companies such as UnitedHealth Group's Optum, Webster Bank, and well-known retail investment companies, such as Fidelity Investments) are in a position to devote more resources to the development, sale, and support of their products and services than we have at our disposal. Our other CDB administration competitors include health insurance carriers, human resources consultants and outsourcers, payroll providers, national CDB specialists, regional third-party administrators, and commercial banks. In addition, numerous indirect competitors, including benefits administration service providers, partner with banks and other HSA custodians to compete with us. Our Network Partners and ecosystem partners may also choose to offer competitive services directly, as some health plans have done. Our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics.
Current wording
Our direct competitors are HSA custodians and other CDB providers. Many of these are state or federally chartered banks and other financial institutions for which we believe benefits administration services are not a core business. Some of our direct competitors (including well-known retail investment companies, such as Fidelity Investments, and healthcare service companies such as UnitedHealth Group's Optum and Webster Bank) are in a position to devote more resources to the development, sale, and support of their products and services than we have at our disposal. Our other CDB administration competitors include health insurance carriers, human resources consultants and outsourcers, payroll providers, national CDB specialists, regional third-party administrators, and commercial banks. In addition, numerous indirect competitors, including benefits administration service providers, partner with banks and other HSA custodians to compete with us. Our Network Partners and ecosystem partners may also choose to offer competitive services directly, as some health plans have done. Our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics.
Previous wording
Federal law and regulations, including the Affordable Care Act, the Internal Revenue Code, the Employee Retirement Income Security Act and Department of Labor regulations, and public health regulations that govern the provision of health insurance and provide the tax advantages associated with our services, play a pivotal role in determining our market opportunity. Privacy and data security-related laws such as the Health Insurance Portability and Accountability Act, or HIPAA, and the Gramm-Leach-Bliley Act, laws governing the provision of investment advice to consumers, such as the Investment Advisers Act of 1940, or the Advisers Act, the USA PATRIOT Act, anti-money laundering laws, and the Federal Deposit Insurance Act, all play a similar role in determining our competitive landscape. In addition, state-level regulations also have significant implications for our business in some cases. For example, our subsidiary HealthEquity Trust Company is regulated by the Wyoming Division of Banking, and several states are considering, or have already passed, new privacy regulations that can affect our business. Various states also have laws and regulations that impose additional restrictions on our collection, storage, and use of personally identifiable information. Privacy regulation in particular has become a priority issue in many states, including, for example, the California Privacy Rights Act, which became effective on January 1, 2023. Our ability to predict and react quickly to relevant legal and regulatory trends and to correctly interpret their market and competitive implications is important to our success.
Current wording
Federal law and regulations, including the Affordable Care Act, the Internal Revenue Code, the Employee Retirement Income Security Act and Department of Labor regulations, and public health regulations that govern the provision of health insurance and provide the tax advantages associated with our services, play a pivotal role in determining our market opportunity. Privacy and data security-related laws such as the Health Insurance Portability and Accountability Act, or HIPAA, and the Gramm-Leach-Bliley Act, laws governing the provision of investment advice to consumers, such as the Investment Advisers Act of 1940, or the Advisers Act, the USA PATRIOT Act, anti-money laundering laws, and the Federal Deposit Insurance Act, all play a similar role in determining our competitive landscape. In addition, state-level regulations also have significant implications for our business in some cases. For example, our subsidiary HealthEquity Trust Company is regulated by the Wyoming Division of Banking, and several states are considering, or have already passed, new privacy regulations that can affect our business. Various states also have laws and regulations that impose additional restrictions on our collection, storage, and use of personally identifiable information. Privacy regulation in particular has become a priority issue in many states, including, for example, the California Privacy Rights Act. Our ability to predict and react quickly to relevant legal and regulatory trends and to correctly interpret their market and competitive implications is important to our success.
Previous wording
The number of our HSAs and CDBs are key metrics because our revenue is driven by the amount we earn from them. The number of our HSAs increased by 1.2 million, or 15%, from October 31, 2023 to October 31, 2024, driven by new HSAs added through the BenefitWallet HSA portfolio acquisition and new HSAs from sales. The number of our CDBs decreased by 29 thousand, or less than 1%, from October 31, 2023 to October 31, 2024, primarily driven by a decrease in FSA accounts, largely offset by an increase in HRA accounts.
Current wording
The number of our HSAs and CDBs are key metrics because our revenue is driven by the amount we earn from them. The number of our HSAs increased by 0.8 million, or 9%, from April 30, 2024 to April 30, 2025, driven by new HSAs from sales and new HSAs added through the BenefitWallet HSA portfolio acquisition. The number of our CDBs increased by 0.3 million, or 4%, from April 30, 2024 to April 30, 2025, primarily driven by an increase in HRA and FSA accounts, partially offset by a decrease in other CDBs.
Previous wording
HSA Assets includes our HSA members’ custodial assets, which consists of the following components: (i) HSA cash, which includes member cash held by our Depository Partners and our insurance company partners, and (ii) HSA investments, which includes member investments held by our custodial investment partner. Measuring HSA Assets is important because our custodial revenue is directly affected by average daily custodial balances for HSA Assets that are revenue generating.
Current wording
HSA Assets include our HSA members’ custodial assets, which consist of the following components: (i) HSA cash, which includes member cash held by our Depository Partners and our insurance company partners, and (ii) HSA investments, which includes member investments held by our custodial investment partner. Measuring HSA Assets is important because our custodial revenue is directly affected by average daily custodial balances for HSA Assets that are revenue generating.
Previous wording
HSA cash increased by $2.4 billion, or 17%, from October 31, 2023 to October 31, 2024, due to net HSA contributions from new and existing HSA members and HSA cash added through the BenefitWallet HSA portfolio acquisition, partially offset by transfers to HSA investments.
Current wording
HSA cash increased by $1.2 billion, or 8%, from April 30, 2024 to April 30, 2025, due to net HSA contributions from new and existing HSA members and HSA cash added through the BenefitWallet HSA portfolio acquisition, partially offset by transfers to HSA investments.
Previous wording
HSA investments increased by $5.0 billion, or 58%, from October 31, 2023 to October 31, 2024, due to the increased market value of invested balances, transfers from HSA cash, and HSA investments added through the BenefitWallet HSA portfolio acquisition.
Current wording
HSA investments increased by $2.8 billion, or 24%, from April 30, 2024 to April 30, 2025, due to the increased market value of invested balances, transfers from HSA cash, and HSA investments added through the BenefitWallet HSA portfolio acquisition.
Previous wording
Total HSA Assets increased by $7.4 billion, or 33%, from October 31, 2023 to October 31, 2024, primarily due to the increased market value of invested balances, HSA Assets added through the BenefitWallet HSA portfolio acquisition, and net HSA contributions from new and existing HSA members.
Current wording
Total HSA Assets increased by $4.0 billion, or 15%, from April 30, 2024 to April 30, 2025, primarily due to net HSA contributions from new and existing HSA members, the increased market value of invested balances, and HSA Assets added through the BenefitWallet HSA portfolio acquisition.
Previous wording
(1)Excludes $0.6 billion of HSA cash held in floating-rate contracts as of October 31, 2024.
Current wording
(1)Excludes $0.7 billion of HSA cash held in floating-rate contracts as of April 30, 2025.
Previous wording
Our net income increased by $41.0 million, or 140%, from the nine months ended October 31, 2023 to the nine months ended October 31, 2024, due to an increase in gross profit and a decrease in income tax provision, partially offset by an increase in operating expenses, including the Lease Settlement, and other expense, as described more fully in the section entitled "Comparison of the three and nine months ended October 31, 2024 and 2023."
Current wording
Our net income increased by $25.1 million, or 87%, from the three months ended April 30, 2024 to the three months ended April 30, 2025, primarily due to an increase in gross profit and a decrease in operating expenses, partially offset by an increase in income tax provision and interest expense, as described more fully in the section entitled "Comparison of the three months ended April 30, 2025 and 2024."
Previous wording
Our Adjusted EBITDA increased by $22.6 million, or 24%, from the three months ended October 31, 2023 to the three months ended October 31, 2024, primarily due to an increase in total revenue, partially offset by increases in professional fees and personnel-related costs.
Current wording
Our Adjusted EBITDA increased by $22.8 million, or 19%, from the three months ended April 30, 2024 to the three months ended April 30, 2025, primarily due to an increase in total revenue, partially offset by increases in personnel-related costs and professional fees.
Previous wording
Our non-GAAP net income increased by $17.2 million, or 33%, from the three months ended October 31, 2023 to the three months ended October 31, 2024, primarily due to an increase in total revenue, partially offset by increases in professional fees and personnel-related costs.
Current wording
Our non-GAAP net income increased by $15.5 million, or 22%, from the three months ended April 30, 2024 to the three months ended April 30, 2025, primarily due to an increase in total revenue, partially offset by increases in personnel-related costs, professional fees, and interest expense.
Previous wording
Network Partners and Clients, our fees are generally based on a fixed tiered structure for the duration of the relevant service agreement and are paid to us on a monthly basis. In addition, once a member’s HSA cash balance reaches a certain threshold, the member is able to invest his or her HSA Assets through our investment partner from which we earn recordkeeping and advisory fees, calculated as a percentage of the member's HSA investments. We recognize revenue on a monthly basis as services are rendered to our members and Clients.
Current wording
Service revenue. We earn service revenue from the fees we charge our Network Partners, Clients, and members for the administration services we provide in connection with the HSAs and other CDBs we offer. With respect to our Network Partners and Clients, our fees are generally based on a fixed tiered structure for the duration of the relevant service agreement and are paid to us on a monthly basis. In addition, once a member’s HSA cash balance reaches a certain threshold, the member is able to invest his or her HSA Assets through our investment partner from
Previous wording
Service costs. Service costs are comprised of costs related to servicing accounts, managing Client and Network Partner relationships and processing reimbursement claims. Expenditures include personnel-related costs, depreciation, amortization, stock-based compensation, common expense allocations (such as office rent, supplies, and other overhead expenses), new member and participant supplies, and other operating costs related to servicing our members.
Current wording
Service costs. Service costs are comprised of costs related to servicing accounts, managing Client and Network Partner relationships and processing reimbursement claims. Expenditures include personnel-related costs, depreciation, amortization, stock-based compensation, common expense allocations (such as office rent, supplies, and other overhead expenses), costs to reimburse members from outside fraud activity, new member and participant supplies, and other operating costs related to servicing our members.
Previous wording
Interchange costs. Interchange costs are comprised of costs we incur in connection with processing payment transactions initiated by our members. Due to the substantiation requirement on FSA/HRA-linked payment card transactions, payment card costs are higher for FSA/HRA card transactions. In addition to fixed per card fees, we are assessed additional transaction costs determined by the amount of the transaction.
Current wording
Interchange costs. Interchange costs are comprised of costs we incur in connection with processing payment transactions initiated by our members. Due to the substantiation requirement on FSA- and HRA-linked payment card transactions, payment card costs are higher for FSA and HRA transactions than for HSA transactions. In addition to fixed per card fees, we are assessed additional transaction costs determined by the amount of the transaction.
Previous wording
Amortization of acquired intangible assets. Amortization of acquired intangible assets results primarily from intangible assets acquired in connection with business combinations. The assets include acquired customer relationships, acquired developed technology, and acquired trade names and trademarks, which we amortize over the assets' estimated useful lives, estimated to be 7-15 years, 2-5 years, and 3 years, respectively. We also acquired intangible HSA portfolios from third-party custodians. We amortize these assets over the assets’ estimated useful life of 15 years. We evaluate our acquired intangible assets for impairment annually, or at a triggering event.
Current wording
-25- relationships, acquired developed technology, and acquired trade names and trademarks, which we amortize over the assets' estimated useful lives, estimated to be 7-15 years, 2-5 years, and 3 years, respectively. We also acquired intangible HSA portfolios from third-party custodians. We amortize these assets over the assets’ estimated useful life of 15 years. We evaluate our acquired intangible assets for impairment annually, or at a triggering event.
Previous wording
Our net income decreased by $9.0 million, or 61%, from the three months ended October 31, 2023 to the three months ended October 31, 2024, due to $30.0 million of expense during the three months ended October 31, 2024 to settle a lawsuit related to a lease termination (the "Lease Settlement"), as described in Note 5—Commitments and contingencies, and increases in other operating expenses and other expense, partially offset by an increase in gross profit and a decrease in income tax provision, as described more fully in the section entitled "Comparison of the three and nine months ended October 31, 2024 and 2023."
Current wording
Comparison of the three months ended April 30, 2025 and 2024
Previous wording
Service revenue. The $5.1 million, or 4%, increase in service revenue from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to the increases in the number of HSAs and the amount of HSA investments, partially offset by lower average service fees per account.
Current wording
Service revenue. The $1.6 million, or 1%, increase in service revenue from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to the increases in the number of Total Accounts and the amount of HSA investments, partially offset by lower average service fees per account.
Previous wording
Custodial revenue. The $40.9 million, or 41%, increase in custodial revenue from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to an increase in average annualized yield on HSA cash from 2.58% for the three months ended October 31, 2023 to 3.17% for the three months ended October 31, 2024 (due to both higher market interest rates and increased participation in our Enhanced Rates offering), the $2.5 billion, or 18%, increase in the average daily balance of HSA cash, as described above, and an increase in interest rates on the portion of our Client-held funds held by our Depository Partners in interest-bearing, demand deposit accounts that have a floating interest rate.
Current wording
Custodial revenue. The $34.8 million, or 29%, increase in custodial revenue from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to an increase in average annualized yield on HSA cash from 2.93% for the three months ended April 30, 2024 to 3.50% for the three months ended April 30, 2025 (due to both higher market interest rates and increased participation in our Enhanced Rates offering) and the $1.9 billion, or 12%, increase in the average daily balance of HSA cash, as described above, partially offset by a decrease in interest rates on the portion of our Client-held funds held by our Depository Partners in interest-bearing demand deposit accounts that have a floating interest rate.
Previous wording
Assuming the current interest rate environment continues, we expect our average annualized yield on HSA cash to further increase as our existing agreements with our Depository Partners are renewed or replaced with agreements with higher rates, resulting in higher custodial revenue. In addition, we expect an increase in the percentage of HSA cash held in our Enhanced Rates offering to continue to positively impact our average annualized yield and thus our custodial revenue. As Basic Rates contracts mature, we intend to transfer the associated HSA cash into Enhanced Rates contracts unless the HSA member affirmatively opts to remain in the Basic Rates offering.
Current wording
On an annual basis, assuming the current interest rate environment continues, we expect our average annualized yield on HSA cash to further increase as our existing agreements with our Depository Partners are renewed or replaced with agreements with higher rates, resulting in higher custodial revenue. In addition, we expect an increase in the percentage of HSA cash held in our Enhanced Rates offering to continue to positively impact our average annualized yield and thus our custodial revenue. As Basic Rates contracts mature, we intend to transfer the associated HSA cash into Enhanced Rates contracts unless the HSA member affirmatively opts to remain in the Basic Rates offering.
Previous wording
Interchange revenue. The $5.2 million, or 15%, increase in interchange revenue from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to an increase in Total Accounts and an increase in spend per account using our payment cards.
Current wording
Interchange revenue. The $6.9 million, or 14%, increase in interchange revenue from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to an increase in Total Accounts and an increase in spend per account using our payment cards.
Previous wording
Total revenue. Total revenue increased $51.2 million, or 21%, from the three months ended October 31, 2023 to the three months ended October 31, 2024 due to the increases in custodial, interchange, and service revenues, described above.
Current wording
Total revenue. Total revenue increased $43.2 million, or 15%, from the three months ended April 30, 2024 to the three months ended April 30, 2025 due to the increases in custodial, interchange, and service revenues, described above.
Previous wording
Service costs. The $11.1 million, or 15%, increase in service costs from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to costs incurred to reimburse and protect members from outside fraud activity, as well as increases in costs to support the increase in Total Accounts and member interactions, partially offset by efficiencies resulting from our technology investments.
Current wording
Service costs. The $5.7 million, or 7%, increase in service costs from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to increases in costs to support the increase in Total Accounts and member interactions and an increase in costs incurred to reimburse members impacted by outside fraud activity, partially offset by efficiencies resulting from our technology investments.
Previous wording
Custodial costs. The $2.2 million, or 28%, increase in custodial costs from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to the $2.5 billion, or 18%, increase in the year-over-year average daily balance of HSA cash, as described above, an increase in fees charged by our Depository Partners, and an increase in the average annualized rate of interest retained by HSA members on HSA cash from 0.22% during the three months ended October 31, 2023 to 0.23% during the three months ended October 31, 2024.
Current wording
Custodial costs. The $1.7 million, or 19%, increase in custodial costs from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to the $1.9 billion, or 12%, increase in the year-over-year average daily balance of HSA cash, as described above and an increase in the average annualized rate of interest retained by HSA members on HSA cash from 0.22% during the three months ended April 30, 2024 to 0.23% during the three months ended April 30, 2025.
Previous wording
On an annual basis, relative to the fiscal year ended January 31, 2024, we expect custodial costs to increase due to an increase in the year-over-year average daily balance of HSA cash, an increase in fees charged by our Depository Partners, and an increase in the average annualized rate of interest retained by HSA members on HSA cash.
Current wording
On an annual basis, relative to the fiscal year ended January 31, 2025, we expect custodial costs to increase due to an increase in the year-over-year average daily balance of HSA cash, an increase in the average annualized rate of interest retained by HSA members on HSA cash, and an increase in fees charged by our Depository Partners.
Previous wording
The $3.9 million, or 19%, increase in interchange costs from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to an increase in Total Accounts and certain costs associated with our transition to a single card processor, which transition was completed in August 2024, partially offset by efficiencies resulting from the transition to a single card processor.
Current wording
Interchange costs. The $1.3 million, or 14%, decrease in interchange costs from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to efficiencies resulting from the transition to a single card processor, partially offset by an increase in Total Accounts.
Previous wording
Total cost of revenue. As we continue to add Total Accounts, we expect that our cost of revenue will increase in dollar amount to support our Network Partners, Clients, and members. However, on an annual basis, relative to the fiscal year ended January 31, 2024, we expect our cost of revenue to decrease as a percentage of our total revenue, primarily due to an increase in custodial revenue, partially offset by increases in personnel costs. For the nine months ended October 31, 2024, cost of revenue as a percentage of total revenue decreased to 33.8% from 37.7% for the nine months ended October 31, 2023, due to total revenue increasing at a significantly higher rate (20%) than total cost of revenue (8%). Cost of revenue will continue to be affected by a number of different factors, including our ability to scale our service delivery, Network Partner implementation, and account management functions.
Current wording
Total cost of revenue. Cost of revenue as a percentage of total revenue decreased to 32.2% for the three months ended April 30, 2025 compared to 34.9% for the three months ended April 30, 2024, due to total revenue increasing at a significantly higher rate (15%) than total cost of revenue (6%). On an annual basis, relative to the fiscal year ended January 31, 2025, we expect that our cost of revenue will decrease in dollar amount, primarily due to a decrease in service costs. We expect our cost of revenue to decrease as a percentage of our total revenue, primarily due to an increase in custodial revenue and a decrease in service costs, partially offset by costs resulting from an increase in Total Accounts. Cost of revenue will continue to be affected by a number of different factors, including our ability to scale our service delivery, Network Partner implementation, and account management functions.
Previous wording
Sales and marketing. The $3.0 million, or 15%, increase in sales and marketing expenses from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to an increase in personnel-related expenses.
Current wording
Sales and marketing. The $2.5 million, or 11%, increase in sales and marketing expenses from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to increases in personnel-related expenses and professional services expenses.
Previous wording
We expect our sales and marketing expenses to increase for the foreseeable future as we continue to focus on our cross-selling program and marketing campaigns. On an annual basis, relative to the fiscal year ended January 31, 2024, we expect our sales and marketing expenses to remain relatively steady as a percentage of our total revenue. However, our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our sales and marketing expenses.
Current wording
We expect our sales and marketing expenses to increase as we continue to focus on our cross-selling and member engagement programs. On an annual basis, relative to the fiscal year ended January 31, 2025, we expect our sales and marketing expenses to remain relatively steady as a percentage of our total revenue. However, our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our sales and marketing expenses.
Previous wording
Technology and development. The $4.6 million, or 8%, increase in technology and development expenses from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to increases in software costs, personnel-related expenses, and professional services expense.
Current wording
Technology and development. The $5.3 million, or 10%, increase in technology and development expenses from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to increases in personnel-related expenses and software costs.
Previous wording
-31- described earlier. On an annual basis, relative to the fiscal year ended January 31, 2024, we expect our technology and development expenses to decrease slightly as a percentage of our total revenue. However, our technology and development expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our technology and development expenses.
Current wording
We expect our technology and development expenses to increase as we continue to invest in the development and security of our proprietary technology, including our ongoing modernization project described earlier. On an annual basis, relative to the fiscal year ended January 31, 2025, we expect our technology and development expenses to remain relatively steady as a percentage of our total revenue. However, our technology and development expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our technology and development expenses.
Previous wording
General and administrative. The $4.6 million, or 17%, increase in general and administrative expenses from the three months ended October 31, 2023 to the three months ended October 31, 2024 was primarily due to professional services expense.
Current wording
General and administrative. The $12.7 million, or 33%, decrease in general and administrative expenses from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to a decrease in stock-based compensation expense resulting from the retirement of our former chief executive officer, partially offset by increases in personnel-related expenses.
Showing the first 40 of 57 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
We believe we have a diverse distribution footprint to attract new Clients and Network Partners. Our sales force calls on enterprise and regional employers in industries across the U.S., as well as potential Network Partners from among health plans, benefits administrators, and retirement plan record keepers. Our Network Partners are a key
Current report — wording carried from elsewhere
-24- which we earn recordkeeping and advisory fees, calculated as a percentage of the member's HSA investments. We recognize revenue on a monthly basis as services are rendered to our members and Clients.
Current report — wording carried from elsewhere
Amortization of acquired intangible assets. Amortization of acquired intangible assets results primarily from intangible assets acquired in connection with business combinations. The assets include acquired customer
Current report — wording carried from elsewhere
On an annual basis, relative to the fiscal year ended January 31, 2025, we expect interchange revenue to continue to increase, primarily due to an increase in Total Accounts.
Current report — wording carried from elsewhere
Our credit agreement includes a senior secured revolving credit facility in an aggregate principal amount of up to $1.0 billion, which matures on August 23, 2029 and may be used in the future for working capital and general
Rearranged previous paragraphs (10)
Previous report — wording carried elsewhere
-20- similar vehicles available to new populations such as individuals in Medicare. However, the timing and impact of these and other developments in U.S. healthcare are uncertain. Moreover, changes in healthcare policy, such as "Medicare for all" plans, could materially and adversely affect our business in ways that are difficult to predict.
Previous report — wording carried elsewhere
-21- interest rates on our custodial revenue. Over longer periods, sustained shifts in prevailing interest rates affect the amount of custodial revenue we can realize on custodial assets and the interest retained by our members.
Previous report — wording carried elsewhere
Service revenue. We earn service revenue from the fees we charge our Network Partners, Clients, and members for the administration services we provide in connection with the HSAs and other CDBs we offer. With respect to our
Previous report — wording carried elsewhere
-29- both higher market interest rates and increased participation in our Enhanced Rates offering), the $2.0 billion, or 15%, increase in the average daily balance of HSA cash, as described above, and an increase in interest rates on the portion of our Client-held funds held by our Depository Partners in interest-bearing, demand deposit accounts that have a floating interest rate.
Previous report — wording carried elsewhere
The $13.6 million, or 11%, increase in interchange revenue from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to an increase in Total Accounts and an increase in spend per account using our payment cards.
Previous report — wording carried elsewhere
We expect our technology and development expenses to increase for the foreseeable future as we continue to invest in the development and security of our proprietary technology, including our ongoing modernization project
Previous report — wording carried elsewhere
The $15.3 million, or 22%, increase in amortization of acquired intangible assets from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to the new intangible assets added through the BenefitWallet HSA portfolio acquisition.
Previous report — wording carried elsewhere
The $30.2 million, or 370%, increase in merger integration expenses from the nine months ended October 31, 2023 to the nine months ended October 31, 2024 was primarily due to the Lease Settlement, as described in Note 5—Commitments and contingencies. Other merger integration expenses during the nine months ended October 31, 2024 consisted of professional fees, including expenses incurred in conjunction with the migration of accounts, technology-related expenses directly related to the Further acquisition and certain ongoing merger integration expenses related to the acquisition of WageWorks.
Previous report — wording carried elsewhere
The $1.0 million increase in other income, net, from the three months ended October 31, 2023 to the three months ended October 31, 2024 was due to increases in interest income on corporate cash and other miscellaneous income, net.
Previous report — wording carried elsewhere
For the nine months ended October 31, 2024 and 2023, we recorded an income tax provision of $15.7 million and $16.0 million, respectively. The decrease in income tax provision was primarily the result of an increase in tax deductible stock-based compensation compared to GAAP stock-based compensation expense and an increase in research and development tax credits, partially offset by an increase in pre-tax book income and an increase in nondeductible executive compensation.