HQY
$63.21
Healthequity
$.79
1.27%
Earnings Details
3rd Quarter October 2022
Tuesday, December 6, 2022 4:01:00 PM
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Summary

Healthequity Reports In-line

Healthequity (HQY) reported 3rd Quarter October 2022 earnings of $0.35 per share on revenue of $216.1 million. The consensus earnings estimate was $0.34 per share on revenue of $206.8 million. The Earnings Whisper number was $0.35 per share. Revenue grew 20.1% on a year-over-year basis.

The company said it expects fiscal year non-GAAP earnings of $1.26 to $1.35 per share on revenue of $850.0 million to $860.0 million. The company's previous guidance was earnings of $1.23 to $1.32 per share on revenue of $834.0 million to $844.0 million and the current consensus earnings estimate is $1.27 per share on revenue of $839.50 million for the year ending January 31, 2023. The company said it expects fiscal 2023 revenue of $950.0 million to $970.0 million. The current consensus revenue estimate is $946.31 million for the year ending January 31, 2024.

HealthEquity Inc is a technology-enabled services platform that empowers consumers to make healthcare saving and spending decisions.

Results
Reported Earnings
$0.35
Earnings Whisper
$0.35
Consensus Estimate
$0.34
Reported Revenue
$216.1 Mil
Revenue Estimate
$206.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

HealthEquity Reports Third Quarter Ended October 31, 2022 Financial Results

Highlights of the third quarter include:

  • Revenue of $216.1 million, an increase of 20% compared to $180.0 million in Q3 FY22.
  • Net loss of $1.6 million, compared to $5.0 million in Q3 FY22, with non-GAAP net income of $32.4 million, an increase of 12% compared to $28.9 million in Q3 FY22.
  • Net loss per diluted share of $0.02, compared to $0.06 in Q3 FY22, with non-GAAP net income per diluted share of $0.38, compared to $0.35 in Q3 FY22.
  • Adjusted EBITDA of $73.4 million, an increase of 20% compared to $61.1 million in Q3 FY22.
  • 7.7 million HSAs, an increase of 23% compared to Q3 FY22.
  • Total HSA Assets of $20.2 billion, an increase of 23% compared to Q3 FY22.
  • 14.5 million Total Accounts, including both HSAs and complementary CDB accounts, an increase of 9% compared to Q3 FY22.

DRAPER, Utah , Dec. 06, 2022 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") custodian, today announced financial results for its third quarter ended October 31, 2022.

"This quarter, Team Purple delivered 13% new HSA sales growth, a 67% narrower GAAP net loss, and Adjusted EBITDA growth of 20% from one year ago," said Jon Kessler, President and CEO. "Today, HealthEquity is the largest HSA provider measured by both accounts and assets, and we intend to build on that momentum by delivering a strong fourth quarter."

Third quarter financial results

Revenue for the third quarter ended October 31, 2022 was $216.1 million, an increase of 20% compared to $180.0 million for the third quarter ended October 31, 2021. Revenue this quarter included: service revenue of $108.6 million, custodial revenue of $74.6 million, and interchange revenue of $32.9 million.

HealthEquity reported a net loss of $1.6 million, or $0.02 per diluted share, and non-GAAP net income of $32.4 million, or $0.38 per diluted share, for the third quarter ended October 31, 2022. The Company reported a net loss of $5.0 million, or $0.06 per diluted share, and non-GAAP net income of $28.9 million, or $0.35 per diluted share, for the third quarter ended October 31, 2021.

Adjusted EBITDA was $73.4 million for the third quarter ended October 31, 2022, an increase of 20% compared to the third quarter ended October 31, 2021. Adjusted EBITDA was 34% of revenue for each of the third quarters ended October 31, 2022 and 2021.

Account and asset metrics

HealthEquity reported sales of 170,000 new HSAs in the third quarter ended October 31, 2022, compared to 151,000 in the third quarter ended October 31, 2021. HSAs as of October 31, 2022 were 7.7 million, an increase of 23% year over year, including 529,000 HSAs with investments, an increase of 23% year over year. Total Accounts as of October 31, 2022 were 14.5 million, including 6.8 million other consumer-directed benefits ("CDBs").

Total HSA Assets as of October 31, 2022 were $20.2 billion, an increase of 23% year over year. Total HSA Assets included $13.1 billion of HSA cash and $7.1 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 October 31, 2022.

Business outlook

For the fiscal year ending January 31, 2023, management expects revenue of $850 million to $860 million. Its outlook for net loss is between $34 million and $27 million, resulting in net loss of $0.40 to $0.32 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $106 million and $114 million, resulting in non-GAAP net income per diluted share of $1.26 to $1.35 (based on an estimated 84 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $261 million to $271 million.

For the fiscal year ending January 31, 2024, management expects revenue of approximately $950 million to $970 million and Adjusted EBITDA of approximately 33-34% of revenue. These amounts assume an average annualized yield on HSA cash of approximately 2.25%.

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 (other than with respect to our Adjusted EBITDA outlook for the fiscal year ending January 31, 2024) to the most comparable GAAP financial measures is included with the financial tables at the end of this release. A reconciliation of our Adjusted EBITDA outlook for the fiscal year ending January 31, 2024 to net income (loss), its most directly comparable GAAP measure, is not included, because our net income (loss) outlook for this future period is not available without unreasonable efforts as we are unable to predict the ultimate outcome of certain significant items excluded from this non-GAAP measure (such as depreciation and amortization, stock-based compensation expense, and income tax provision (benefit)).

Conference call

HealthEquity management will host a conference call at 4:30 pm (Eastern Time) on Tuesday, December 6, 2022 to discuss the fiscal third quarter 2023 financial results. The conference call will be accessible by dialing 1-833-630-1956, or 1-412-317-1837 for international callers, and referencing conference ID "HealthEquity, Inc. call." 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 Contact
Richard Putnam
801-727-1209
rputnam@healthequity.com


HealthEquity, Inc. and its subsidiaries
Condensed consolidated balance sheets

(in thousands, except par value)October 31, 2022 January 31, 2022
 (unaudited)  
Assets   
Current assets   
Cash and cash equivalents$210,197 $225,414
Accounts receivable, net of allowance for doubtful accounts of $6,045 and $6,228 as of October 31, 2022 and January 31, 2022, respectively 87,716  87,428
Other current assets 34,247  38,495
Total current assets 332,160  351,337
Property and equipment, net 15,620  23,372
Operating lease right-of-use assets 58,536  63,613
Intangible assets, net 964,531  973,137
Goodwill 1,645,759  1,645,836
Other assets 48,151  49,807
Total assets$3,064,757 $3,107,102
Liabilities and stockholders’ equity   
Current liabilities   
Accounts payable$15,842 $27,541
Accrued compensation 35,140  47,136
Accrued liabilities 33,367  57,589
Current portion of long-term debt 15,313  8,750
Operating lease liabilities 10,713  12,171
Total current liabilities 110,375  153,187
Long-term liabilities   
Long-term debt, net 911,406  922,077
Operating lease liabilities, non-current 60,819  65,232
Other long-term liabilities 9,758  14,185
Deferred tax liability 89,281  99,846
Total long-term liabilities 1,071,264  1,101,340
Total liabilities 1,181,639  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 October 31, 2022 and January 31, 2022, respectively   
Common stock, $0.0001 par value, 900,000 shares authorized, 84,636 and 83,780 shares issued and outstanding as of October 31, 2022 and January 31, 2022, respectively 8  8
Additional paid-in capital 1,732,985  1,676,508
Accumulated earnings 150,125  176,059
Total stockholders’ equity 1,883,118  1,852,575
Total liabilities and stockholders’ equity$3,064,757 $3,107,102


HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of operations and comprehensive loss (unaudited)

 Three months ended October 31, Nine months ended October 31,
(in thousands, except per share data) 2022   2021   2022   2021 
Revenue       
Service revenue$108,580  $102,733  $315,962  $314,449 
Custodial revenue 74,642   49,006   199,606   144,760 
Interchange revenue 32,864   28,215   112,339   94,050 
Total revenue 216,086   179,954   627,907   553,259 
Cost of revenue       
Service costs 76,493   66,217   232,281   204,183 
Custodial costs 6,812   5,734   20,543   15,567 
Interchange costs 5,923   4,683   19,240   15,102 
Total cost of revenue 89,228   76,634   272,064   234,852 
Gross profit 126,858   103,320   355,843   318,407 
Operating expenses       
Sales and marketing 17,245   12,726   49,648   42,288 
Technology and development 48,890   38,070   140,653   111,437 
General and administrative 25,131   20,004   74,795   63,503 
Amortization of acquired intangible assets 23,541   19,642   71,420   59,745 
Merger integration 6,509   13,244   23,486   38,422 
Total operating expenses 121,316   103,686   360,002   315,395 
Income (loss) from operations 5,542   (366)  (4,159)  3,012 
Other expense       
Interest expense (12,165)  (11,881)  (34,119)  (25,824)
Other income (expense), net 443   3,122   174   (164)
Total other expense (11,722)  (8,759)  (33,945)  (25,988)
Loss before income taxes (6,180)  (9,125)  (38,104)  (22,976)
Income tax benefit (4,539)  (4,087)  (12,170)  (11,505)
Net loss and comprehensive loss$(1,641) $(5,038) $(25,934) $(11,471)
Net loss per share:       
Basic$(0.02) $(0.06) $(0.31) $(0.14)
Diluted$(0.02) $(0.06) $(0.31) $(0.14)
Weighted-average number of shares used in computing net loss per share:       
Basic 84,572   83,551   84,349   82,939 
Diluted 84,572   83,551   84,349   82,939 


HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of cash flows (unaudited)

 Nine months ended October 31,
(in thousands) 2022   2021 
Cash flows from operating activities:   
Net loss$(25,934) $(11,471)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization 120,726   98,364 
Stock-based compensation 50,310   41,700 
Amortization of debt discount and issuance costs 2,454   3,616 
Loss on extinguishment of debt    4,044 
Change in fair value of contingent consideration    (2,147)
Other non-cash items 269   (750)
Deferred taxes (10,565)  (8,765)
Changes in operating assets and liabilities:   
Accounts receivable, net (451)  (10,090)
Other assets 6,809   19,888 
Operating lease right-of-use assets 6,169   8,944 
Accrued compensation (11,630)  (18,098)
Accounts payable, accrued liabilities, and other current liabilities (33,170)  (34,023)
Operating lease liabilities, non-current (5,401)  (6,808)
Other long-term liabilities (4,427)  6,034 
Net cash provided by operating activities 95,159   90,438 
Cash flows from investing activities:   
Purchases of software and capitalized software development costs (35,306)  (49,033)
Purchases of property and equipment (2,971)  (7,284)
Acquisition of intangible member assets (70,574)  (64,463)
Acquisitions, net of cash acquired    (49,533)
Proceeds from sale of equity securities    2,367 
Net cash used in investing activities (108,851)  (167,946)
Cash flows from financing activities:   
Principal payments on long-term debt (6,562)  (1,003,125)
Settlement of client-held funds obligation, net (1,579)  (1,565)
Proceeds from exercise of common stock options 6,616   7,728 
Proceeds from issuance of long-term debt    950,000 
Payment of debt issuance costs    (11,846)
Proceeds from follow-on equity offering, net of payments for offering costs    456,642 
Net cash provided by (used in) financing activities (1,525)  397,834 
Increase (decrease) in cash and cash equivalents (15,217)  320,326 
Beginning cash and cash equivalents 225,414   328,803 
Ending cash and cash equivalents$210,197  $649,129 


HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of cash flows (unaudited) (continued)

 Nine months ended October 31,
(in thousands) 2022  2021 
Supplemental cash flow data:   
Interest expense paid in cash$36,268 $13,685 
Income tax payments (refunds), net 775  (5,926)
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 4,099  3,708 
Purchases of property and equipment included in accounts payable or accrued liabilities 297  479 
Purchases of intangible member assets included in accounts payable or accrued liabilities   2,281 
Contingent consideration recognized at acquisition   8,147 
Exercise of common stock options receivable 21  1 
Decrease in goodwill due to measurement period adjustments, net 77  19 


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 October 31, Nine months ended October 31,
(in thousands) 2022  2021  2022  2021
Cost of revenue$3,662 $3,076 $10,667 $8,547
Sales and marketing 2,569  829  7,136  5,677
Technology and development 4,045  3,458  10,388  10,164
General and administrative 7,894  5,921  22,119  17,312
Other expense, net (1)       342
Total stock-based compensation expense$18,170 $13,284 $50,310 $42,042

(1)   Equity-based awards exchanged for cash in connection with the Luum acquisition.

Total Accounts (unaudited)

(in thousands, except percentages)October 31, 2022 October 31, 2021 % Change January 31, 2022
HSAs7,650 6,241 23% 7,207
New HSAs from sales - Quarter-to-date170 151 13% 472
New HSAs from sales - Year-to-date526 446 18% 918
New HSAs from acquisitions - Year-to-date90 160 (44)% 740
HSAs with investments529 431 23% 455
CDBs6,849 7,085 (3)% 7,192
Total Accounts14,499 13,326 9% 14,399
Average Total Accounts - Quarter-to-date14,523 13,247 10% 14,326
Average Total Accounts - Year-to-date14,482 13,158 10% 13,450


HSA Assets (unaudited)

(in millions, except percentages)October 31, 2022 October 31, 2021 % Change January 31, 2022
HSA cash$13,096 $10,469 25% $12,943
HSA investments 7,108  5,959 19%  6,675
Total HSA Assets 20,204  16,428 23%  19,618
Average daily HSA cash - Year-to-date 12,941  10,066 29%  10,579
Average daily HSA cash - Quarter-to-date 12,973  10,182 27%  12,118


Client-held funds (unaudited)

(in millions, except percentages)October 31, 2022 October 31, 2021 % Change January 31, 2022
Client-held funds$759 $811 (6)% $897
Average daily Client-held funds - Year-to-date 832  849 (2)%  842
Average daily Client-held funds - Quarter-to-date 794  796 —%  822


Reconciliation of net loss to Adjusted EBITDA (unaudited)

 Three months ended October 31, Nine months ended October 31,
(in thousands) 2022   2021   2022   2021 
Net loss$(1,641) $(5,038) $(25,934) $(11,471)
Interest income (443)  (478)  (584)  (1,419)
Interest expense 12,165   11,881   34,119   25,824 
Income tax benefit (4,539)  (4,087)  (12,170)  (11,505)
Depreciation and amortization 16,959   13,904   49,306   38,619 
Amortization of acquired intangible assets 23,541   19,642   71,420   59,745 
Stock-based compensation expense 18,170   13,284   50,310   41,700 
Merger integration expenses 6,509   13,244   23,486   38,422 
Acquisition costs (gains) (1)    (2,687)  53   4,917 
Gain on equity securities          (1,677)
Amortization of incremental costs to obtain a contract 1,114   843   3,256   3,468 
Costs associated with unused office space 1,181      3,788    
Other 345   579   1,690   (1,047)
Adjusted EBITDA$73,361  $61,087  $198,740  $185,576 

(1)   For the nine months ended October 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$(34) - (27)
Interest income(1)
Interest expense48
Income tax benefit(15) - (12)
Depreciation and amortization66
Amortization of acquired intangible assets94
Stock-based compensation expense65
Merger integration expenses27
Amortization of incremental costs to obtain a contract4
Costs associated with unused office space5
Other expense2
Adjusted EBITDA$261 - 271


Reconciliation of net loss to non-GAAP net income (unaudited)

 Three months ended October 31, Nine months ended October 31,
(in thousands, except per share data) 2022   2021   2022   2021 
Net loss$(1,641) $(5,038) $(25,934) $(11,471)
Income tax benefit (4,539)  (4,087)  (12,170)  (11,505)
Loss before income taxes - GAAP (6,180)  (9,125)  (38,104)  (22,976)
Non-GAAP adjustments:       
Amortization of acquired intangible assets 23,541   19,642   71,420   59,745 
Stock-based compensation expense 18,170   13,284   50,310   41,700 
Merger integration expenses 6,509   13,244   23,486   38,422 
Acquisition costs (gains)    (2,687)  53   4,917 
Gain on equity securities          (1,677)
Costs associated with unused office space 1,181      3,788    
Loss on extinguishment of debt    4,192      4,192 
Total adjustments to loss before income taxes - GAAP 49,401   47,675   149,057   147,299 
Income before income taxes - Non-GAAP 43,221   38,550   110,953   124,323 
Income tax provision - Non-GAAP (1) 10,805   9,638   27,738   31,081 
Non-GAAP net income 32,416   28,912   83,215   93,242 
        
Diluted weighted-average shares 84,572   83,551   84,349   82,939 
Non-GAAP net income per diluted share$0.38  $0.35  $0.99  $1.12 

(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$(34) - (27)
Income tax benefit(15) - (12)
Loss before income taxes - GAAP(49) - (39)
Non-GAAP adjustments: 
Amortization of acquired intangible assets94
Stock-based compensation expense65
Merger integration expenses27
Costs associated with unused office space5
Total adjustments to loss before income taxes - GAAP191
Income before income taxes - Non-GAAP142 - 152
Income tax provision - Non-GAAP (1)36 - 38
Non-GAAP net income$106 - 114
  
Diluted weighted-average shares84
Non-GAAP net income per diluted share (2)$1.26 - 1.35

(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

TermDefinition
HSAA financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis.
CDBConsumer-directed benefits offered by employers, including flexible spending and health reimbursement arrangements (“FSAs” and “HRAs”), Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, commuter and other benefits.
HSA memberConsumers with HSAs that we serve.
Total HSA AssetsHSA members’ custodial cash assets held by our federally insured depository partners and our insurance company partners. Total HSA Assets also includes HSA members' investments in mutual funds through our custodial investment fund partner.
ClientOur employer clients.
Total AccountsThe sum of HSAs and CDBs on our platforms.
Client-held fundsDeposits held on behalf of our Clients to facilitate administration of our CDBs.
Network PartnerOur health plan partners, benefits administrators, and retirement plan recordkeepers.
Adjusted EBITDAAdjusted 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 incomeCalculated 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 shareCalculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.

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Source: HealthEquity, Inc.