View:
Download DOC
Download PDF
Download XLS
Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

September 3, 2019

Commission File Number: 001-36568

 
 
 
HEALTHEQUITY, INC.
 
 
 


Delaware
 
7389
 
52-2383166
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification Number)

15 West Scenic Pointe Drive
Suite 100
Draper, Utah 84020
(801) 727-1000

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

Not Applicable
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.0001 per share
HQY
The NASDAQ Global Select Market





Item 2.02    Results of Operations and Financial Condition
On September 3, 2019, HealthEquity, Inc. issued a press release attached as Exhibit 99.1 to this current report on Form 8-K.
The information in Exhibit 99.1 is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01    Financial Statements and Exhibits

(d) Exhibits

Exhibit No.    Description

99.1






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
HEALTHEQUITY, INC.
Date: September 3, 2019
By:
 
/s/ Darcy Mott
 
Name:
 
Darcy Mott
 
Title:
 
Executive Vice President and Chief Financial Officer




Exhibit
HealthEquity Reports Second Quarter Ended July 31, 2019 Financial Results
Highlights of the second quarter include:
•
Revenue of $86.6 million, an increase of 22% compared to Q2 FY19.
•
Net income of $19.4 million, a decrease of 14% compared to $22.5 million in Q2 FY19.
•
Net income per diluted share of $0.30 compared to $0.36 in Q2 FY19.
•
Non-GAAP net income per diluted share of $0.45 compared to $0.36 in Q2 FY19.
•
Adjusted EBITDA of $40.6 million, an increase of 28% compared to Q2 FY19.
•
HSA Members of 4.2 million, an increase of 16% compared to Q2 FY19.
•
Total Custodial Assets of $8.5 billion, an increase of 21% compared to Q2 FY19.
Draper, Utah – September 3, 2019 – HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") non-bank custodian, today announced financial results for its second quarter ended July 31, 2019.
“We believe that HealthEquity’s results in the second quarter and the speedy close of the WageWorks acquisition position us for a strong second half selling season,” said Jon Kessler, HealthEquity’s President and CEO. “HealthEquity’s more than 215,000 new HSAs and $400 million in custodial asset growth in the first half provides the team the opportunity to once again outpace HSA market growth this year. HealthEquity’s unique combined offering of HSAs and consumer-directed benefits will enable us to continue building our leading HSA market position.”
Second quarter financial results
For the second quarter ended July 31, 2019, HealthEquity reported revenue of $86.6 million, an increase of 22% compared to $71.1 million for the second quarter ended July 31, 2018. Revenue consisted of:
•
Service revenue of $26.3 million, an increase of 5% compared to Q2 FY19.
•
Custodial revenue of $43.6 million, an increase of 42% compared to Q2 FY19.
•
Interchange revenue of $16.7 million, an increase of 8% compared to Q2 FY19.
Net income was $19.4 million for the second quarter ended July 31, 2019, compared to $22.5 million for the second quarter ended July 31, 2018.
Net income per diluted share was $0.30 for the second quarter ended July 31, 2019, compared to $0.36 for the second quarter ended July 31, 2018.
Non-GAAP net income per diluted share was $0.45 for the second quarter ended July 31, 2019, compared to $0.36 for the second quarter ended July 31, 2018.
Adjusted EBITDA was $40.6 million for the second quarter ended July 31, 2019, an increase of 28% compared to $31.8 million for the second quarter ended July 31, 2018. Adjusted EBITDA was 47% of revenue for the second quarter ended July 31, 2019, compared to 45% for the second quarter ended July 31, 2018.
As of July 31, 2019, we had $815.2 million of cash and cash equivalents and no outstanding debt. This compares to $361.5 million in cash and cash equivalents and no outstanding debt as of January 31, 2019.
HSA Member and Custodial Asset metrics
The total number of HSAs for which we serve as a non-bank custodian ("HSA Members") as of July 31, 2019 was 4.2 million, an increase of 16% from 3.6 million as of July 31, 2018. Total Active HSA Members as of July 31, 2019 was 3.3 million, an increase of 13% from 2.9 million as of July 31, 2018. Total HSA Members with investments as of July 31, 2019 was 187,000, an increase of 31% from 143,000 as of July 31, 2018.
Total Custodial Assets as of July 31, 2019 was $8.5 billion, an increase of 21% year over year, consisting of:
•
Custodial Cash Assets of $6.5 billion, an increase of 17% compared to July 31, 2018; and
•
Custodial Investment Assets of $2.1 billion, an increase of 38% compared to July 31, 2018.






Business outlook
We have updated the HealthEquity standalone outlook for the year ending January 31, 2020. We expect our revenue to be between $341 million and $347 million. Our outlook for net income is a range of $9 million to $13 million, resulting in a net income per diluted share range of $0.13 to $0.19. Our Adjusted EBITDA outlook is a range of $138 million to $142 million. We define Adjusted EBITDA as adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, integration and acquisition-related costs, unrealized gains and losses on marketable equity securities, and other certain non-operating items. We also expect our non-GAAP net income to be in a range between $76 million and $80 million. Our non-GAAP net income is calculated by adding back to net income amortization of acquired intangible assets, stock-based compensation expense, and integration and acquisition-related costs, net of an estimated statutory tax rate of 24%, subtracting the excess tax benefits due to the adoption of Accounting Standards Update ("ASU") 2016-09, and adjusting for unrealized gains and losses on marketable equity securities, net of an estimated statutory tax rate of 24%. Our non-GAAP net income outlook results in a non-GAAP net income per diluted share range between $1.10 to $1.16 (based on an estimated 69 million weighted-average shares outstanding).
Regarding the WageWorks acquisition, which closed August 30, 2019, we will include WageWorks' operating results for the five months from September through January 2020. In addition to our outlook for the HealthEquity standalone business above, we expect WageWorks revenue for the five months to be between $170 and $175 million.
A reconciliation of the non-GAAP financial measures used in this release to the most comparable GAAP financial measures is included with the financial tables at the end of this release.
Conference call
HealthEquity management will host a conference call at 5:00 pm (Eastern Time) on Tuesday, September 3, 2019 to discuss the fiscal second quarter 2020 financial results. The conference call will be accessible by dialing 844-791-6252, or 661-378-9636 for international callers, and referencing conference ID 5799847. A live audio webcast of the call will also be available on the investor relations section of our website at http://ir.healthequity.com.
Non-GAAP financial Information
To supplement our financial information presented on a GAAP basis, we disclose 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, integration and acquisition-related costs, unrealized gains and losses on marketable equity securities, and other certain non-operating items.
•
Non-GAAP net income is calculated by adding back to GAAP net income amortization of acquired intangible assets, stock-based compensation expense, and integration and acquisition-related costs, net of an estimated statutory tax rate, subtracting the excess tax benefits due to the adoption of ASU 2016-09, and adjusting for unrealized gains and losses on marketable equity securities, net of an estimated statutory 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 of financial results 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. 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 administers Health Savings Accounts (HSAs) and other consumer directed benefits for nearly 12 million members 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, future efficiencies, tax rates, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to be correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, risks related to the following:
•
our ability to realize the anticipated financial and other benefits from combining the operations of WageWorks with our business in an efficient and effective manner;
•
our ability to compete effectively in a rapidly evolving healthcare industry;
•
our dependence on the continued availability and benefits of tax-advantaged health savings accounts;
•
our ability to successfully identify, acquire and integrate additional portfolio purchases or acquisition targets;
•
the significant competition we face and may face in the future, including from those with greater resources than us;
•
our reliance on the availability and performance of our technology and communications systems;
•
recent and potential future cybersecurity breaches of our technology and communications systems and other data interruptions, including resulting costs and liabilities, reputational damage and loss of business;
•
the current uncertain healthcare environment, including changes in healthcare programs and expenditures and related regulations;
•
our ability to comply with current and future privacy, healthcare, tax, investment advisor and other laws applicable to our business;
•
our reliance on partners and third party vendors for distribution and important services;
•
our ability to 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 most recent Annual Report on Form 10-K and subsequent periodic and current reports. Past performance is not necessarily indicative of future results. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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)
July 31, 2019

 
January 31, 2019

 
(unaudited)

 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
815,160

 
$
361,475

Accounts receivable, net of allowance for doubtful accounts as of July 31, 2019 and January 31, 2019 of $105 and $125, respectively
27,357

 
25,668

Other current assets
10,999

 
7,534

Total current assets
853,516

 
394,677

Other investments
81,839

 
709

Property and equipment, net
9,873

 
8,223

Operating lease right-of-use assets
36,716

 
—

Intangible assets, net
88,768

 
79,666

Goodwill
4,651

 
4,651

Deferred tax asset
666

 
1,677

Other assets
22,311

 
20,413

Total assets
$
1,098,340

 
$
510,016

Liabilities and stockholders’ equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
2,740

 
$
3,520

Accrued compensation
11,055

 
16,981

Accrued liabilities
19,392

 
8,552

Operating lease liabilities
3,954

 
—

Total current liabilities
37,141

 
29,053

Operating lease liabilities, non-current
35,660

 
—

Deferred tax liability
7,773

 
916

Other long-term liabilities
735

 
2,968

Total liabilities
81,309

 
32,937

Commitments and contingencies
 
 
 
Stockholders’ equity
 
 
 
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of July 31, 2019 and January 31, 2019, respectively
—

 
—

Common stock, $0.0001 par value, 900,000 shares authorized, 70,603 and 62,446 shares issued and outstanding as of July 31, 2019 and January 31, 2019, respectively
7

 
6

Additional paid-in capital
783,986

 
305,223

Accumulated earnings
233,038

 
171,850

Total stockholders’ equity
1,017,031

 
477,079

Total liabilities and stockholders’ equity
$
1,098,340

 
$
510,016





HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of operations and comprehensive income (unaudited)
(in thousands, except per share data)
Three months ended July 31,
 
 
Six months ended July 31,
 
2019

 
2018

 
2019

 
2018

Revenue:
 
 
 
 
 
 
 
Service revenue
$
26,282

 
$
24,935

 
$
53,090

 
$
49,756

Custodial revenue
43,614

 
30,715

 
85,566

 
59,149

Interchange revenue
16,727

 
15,417

 
35,019

 
32,066

Total revenue
86,623

 
71,067

 
173,675

 
140,971

Cost of revenue:
 
 
 
 

 
 
Service costs
19,745

 
17,199

 
40,394

 
35,246

Custodial costs
4,209

 
3,502

 
8,332

 
6,941

Interchange costs
4,229

 
3,791

 
8,756

 
7,853

Total cost of revenue
28,183

 
24,492

 
57,482

 
50,040

Gross profit
58,440

 
46,575

 
116,193

 
90,931

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
8,391

 
7,243

 
17,361

 
14,103

Technology and development
11,645

 
8,398

 
22,550

 
16,377

General and administrative
9,262

 
7,893

 
17,971

 
15,400

Integration
2,784

 
—

 
2,784

 
—

Amortization of acquired intangible assets
1,494

 
1,478

 
2,985

 
2,948

Total operating expenses
33,576

 
25,012

 
63,651

 
48,828

Income from operations
24,864

 
21,563

 
52,542

 
42,103

Other income (expense), net
(1,128
)
 
(75
)
 
22,472

 
(76
)
Income before income taxes
23,736

 
21,488

 
75,014

 
42,027

Income tax provision (benefit)
4,370

 
(1,029
)
 
13,826

 
(3,067
)
Net income and comprehensive income
$
19,366

 
$
22,517

 
$
61,188

 
$
45,094

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.30

 
$
0.36

 
$
0.97

 
$
0.73

Diluted
$
0.30

 
$
0.36

 
$
0.94

 
$
0.72

Weighted-average number of shares used in computing net income per share:
 
 
 
 
 
 
 
Basic
64,220

 
61,880

 
63,289

 
61,531

Diluted
65,583

 
63,397

 
64,785

 
63,060





HealthEquity, Inc. and its subsidiaries
Condensed consolidated statements of cash flows (unaudited)
 
Six months ended July 31,
 
(in thousands)
2019

 
2018

Cash flows from operating activities:
 
 
 
Net income
$
61,188

 
$
45,094

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
9,722

 
8,916

Unrealized (gains) losses on marketable equity securities and other
(27,180
)
 
86

Deferred taxes
7,868

 
2,351

Stock-based compensation
13,618

 
9,727

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(1,689
)
 
(3,304
)
Other assets
(5,036
)
 
(6,921
)
Operating lease right-of-use assets
1,286

 
—

Accounts payable
(1,083
)
 
(837
)
Accrued compensation
(5,926
)
 
(2,826
)
Accrued liabilities and other current liabilities
4,942

 
56

Operating lease liabilities, non-current
(1,210
)
 
—

Other long-term liabilities
331

 
298

Net cash provided by operating activities
56,831

 
52,640

Cash flows from investing activities:
 
 
 
Purchases of intangible member assets
(1,736
)
 
(1,014
)
Purchases of marketable equity securities and other
(53,845
)
 
(368
)
Purchases of property and equipment
(3,492
)
 
(2,690
)
Purchases of software and capitalized software development costs
(9,518
)
 
(4,701
)
Net cash used in investing activities
(68,591
)
 
(8,773
)
Cash flows from financing activities:
 
 
 
Proceeds from follow-on equity offering, net of payments for offering costs
458,881

 
—

Proceeds from exercise of common stock options
6,564

 
18,469

Net cash provided by financing activities
465,445

 
18,469

Increase in cash and cash equivalents
453,685

 
62,336

Beginning cash and cash equivalents
361,475

 
199,472

Ending cash and cash equivalents
$
815,160

 
$
261,808

Supplemental cash flow data:
 
 
 
Interest expense paid in cash
$
101

 
$
101

Income taxes paid in cash, net of refunds received
9,119

 
554

Supplemental disclosures of non-cash investing and financing activities:
 
 
 
Purchases of property and equipment included in accounts payable or accrued liabilities at period end
$
3

 
$
14

Purchases of software and capitalized software development costs included in accounts payable or accrued liabilities at period end
487

 
175

Purchases of intangible member assets accrued during the period
6,500

 
181

Exercise of common stock options receivable
87

 
135

Follow-on equity offering costs accrued during the period
386

 
—

Debt issuance costs accrued during the period
345

 
—





Stock-based compensation expense (unaudited)
Total stock-based compensation expense included in the consolidated statements of operations and comprehensive income is as follows:
 
 
Three months ended July 31,
 
 
Six months ended July 31,
 
(in thousands)
 
2019

 
2018

 
2019

 
2018

Cost of revenue
 
$
1,010

 
$
807

 
$
1,869

 
$
1,220

Sales and marketing
 
1,158

 
891

 
2,166

 
1,596

Technology and development
 
1,930

 
1,300

 
3,429

 
2,291

General and administrative
 
3,492

 
2,490

 
6,154

 
4,620

Total stock-based compensation expense
 
$
7,590

 
$
5,488

 
$
13,618

 
$
9,727

HSA Members (unaudited)
(in thousands, except percentages)
 
July 31, 2019

 
July 31, 2018

 
% Change

 
January 31, 2019

HSA Members
 
4,163

 
3,574

 
16
 %
 
3,994

Average HSA Members - Year-to-date
 
4,073

 
3,488

 
17
 %
 
3,608

Average HSA Members - Quarter-to-date
 
4,119

 
3,533

 
17
 %
 
3,813

New HSA Members - Year-to-date
 
215

 
219

 
(2
)%
 
679

New HSA Members - Quarter-to-date
 
126

 
121

 
4
 %
 
341

Active HSA Members
 
3,300

 
2,933

 
13
 %
 
3,241

HSA Members with investments
 
187

 
143

 
31
 %
 
163

HSA Member Custodial assets (unaudited)
(in millions, except percentages)
 
July 31, 2019

 
July 31, 2018

 
% Change

 
January 31, 2019

Custodial cash
 
$
6,460

 
$
5,537

 
17
%
 
$
6,428

Custodial investments
 
2,056

 
1,494

 
38
%
 
1,670

Total custodial assets
 
$
8,516

 
$
7,031

 
21
%
 
$
8,098

Average daily custodial cash - Year-to-date
 
$
6,404

 
$
5,478

 
17
%
 
$
5,586

Average daily custodial cash - Quarter-to-date
 
$
6,402

 
$
5,489

 
17
%
 
$
5,837

Net income reconciliation to Adjusted EBITDA (unaudited)
 
 
Three months ended July 31,
 
 
Six months ended July 31,
 
(in thousands)
 
2019

 
2018

 
2019

 
2018

Net income
 
$
19,366

 
$
22,517

 
$
61,188

 
$
45,094

Interest income
 
(1,884
)
 
(303
)
 
(3,227
)
 
(561
)
Interest expense
 
67

 
69

 
130

 
136

Income tax provision (benefit)
 
4,370

 
(1,029
)
 
13,826

 
(3,067
)
Depreciation and amortization
 
3,455

 
2,918

 
6,737

 
5,968

Amortization of acquired intangible assets
 
1,494

 
1,478

 
2,985

 
2,948

Stock-based compensation expense
 
7,590

 
5,488

 
13,618

 
9,727

Integration-related costs
 
2,784

 
—

 
2,784

 
—

Acquisition-related costs
 
6,596

 
224

 
7,780

 
225

Unrealized gain on marketable equity securities
 
(3,774
)
 
—

 
(27,285
)
 
—

Other (1)
 
579

 
439

 
1,030

 
958

Adjusted EBITDA
 
$
40,643

 
$
31,801

 
$
79,566

 
$
61,428

(1)
For the three months ended July 31, 2019 and 2018, Other consisted of non-income-based taxes of $108 and $116, other (income)/costs of $15 and $(32), and amortization of incremental costs to obtain a contract of $456 and $355, respectively. For the six months ended July 31, 2019 and 2018, Other consisted of non-income-based taxes of $121 and $220, other costs of $9 and $56, and amortization of incremental costs to obtain a contract of $900 and $682, respectively.






Reconciliation of net income outlook to Adjusted EBITDA outlook (unaudited)
 
Outlook for the year ending
(in millions)
January 31, 2020
Net income
$9 - $13
Interest expense
~ 23
Income tax benefit
~ (1)
Depreciation and amortization
~ 16
Amortization of acquired intangible assets
~ 36
Stock-based compensation expense
~ 28
Integration-related costs
~ 29
Acquisition-related costs
~ 27
Unrealized gain on marketable equity securities
~ (28)
Other
~ (1)
Adjusted EBITDA
$138 - $142

Reconciliation of non-GAAP net income per diluted share (unaudited)

Three months ended
 
Six months ended
 
Outlook for the year ending

(in millions, except per share data)
July 31, 2019

July 31, 2018

July 31, 2019

July 31, 2018

January 31, 2020

Net income
$19

$22

$61

$45

$9 - $13

Amortization of acquired intangible assets, net of tax (1)
1

1

3

3

27

Stock-based compensation, net of tax (1)
6

4

10

7

22

Excess tax benefit due to adoption of ASU 2016-09
(1
)
(5
)
(3
)
(12
)
(3
)
Integration-related costs, net of tax (1)
2

-

2

-

22

Acquisition-related costs, net of tax (1)
5

-

6

-
20

Unrealized gain on marketable equity securities, net of tax (1)
(3
)
-
(21
)
-
(21
)
Non-GAAP net income
$29

$22

$58

$43

$76 - $80

 
 
 
 
 
 
Diluted weighted-average shares used in computing GAAP and Non-GAAP per share amounts
66

63

65

63

69

Non-GAAP net income per diluted share (2)
$0.45

$0.36

$0.89

$0.68

$1.10 - $1.16

(1) For the three and six months ended July 31, 2019 and 2018, the Company used an estimated statutory tax rate of 24% to calculate the net impact of stock-based compensation expense, mark-to-market adjustments, and acquisition and integration-related costs.
(2) Non-GAAP net income per diluted share does not calculate due to rounding of non-GAAP net income and diluted weighted-average shares.















Certain terms
Term
Definition
HSA
A financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis.
HSA Member
An HSA for which we serve as custodian.
Active HSA Member
An HSA Member that (i) is associated with a Health Plan and Administrator Partner or an Employer Partner, in each case as of the end of the applicable period; or (ii) has held a custodial balance at any point during the previous twelve month period.

Custodial cash assets
HSA Members' deposits with our federally-insured custodial depository partners and custodial cash deposits invested in an annuity contract with our insurance company partner.
Custodial investments
HSA Members' investments in mutual funds through our custodial investment fund partner.
Employer Partner
Our employer clients.
Health Plan and Administrator Partner
Our Health Plan and Administrator clients.
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, unrealized gains and losses on marketable equity securities, acquisition and integration-related costs, and other certain non-operating items.
Non-GAAP net income
Calculated by adding back to net income amortization of acquired intangible assets, stock-based compensation expense, and integration and acquisition-related costs, net of an estimated statutory tax rate, subtracting the excess tax benefits due to the adoption of ASU 2016-09, and adjusting for unrealized gains and losses on marketable equity securities, net of an estimated statutory tax rate.
Non-GAAP net income per diluted share
Calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.