Part I. [Financial Information](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20statements) The company reported increased revenue and net income, stable operating cash flow, and a slight decrease in total assets for the quarter [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20consolidated%20balance%20sheets) Total assets slightly decreased to $3.42 billion, while liabilities decreased and equity increased as of April 30, 2025 Balance Sheet Summary (as of April 30, 2025 vs. January 31, 2025) | (in thousands) | April 30, 2025 (unaudited) | January 31, 2025 | | :--- | :--- | :--- | | **Total Assets** | **$3,416,273** | **$3,448,550** | | Cash and cash equivalents | $287,894 | $295,948 | | Goodwill | $1,648,145 | $1,648,145 | | **Total Liabilities** | **$1,292,467** | **$1,333,639** | | Long-term debt, net | $1,056,566 | $1,056,301 | | **Total Stockholders' Equity** | **$2,123,806** | **$2,114,911** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20consolidated%20statements%20of%20operations%20and%20comprehensive%20income) Total revenue increased 15% to $330.8 million, with net income surging 87% to $53.9 million and diluted EPS rising to $0.61 Statement of Operations Summary (Three months ended April 30) | (in thousands, except per share data) | 2025 | 2024 | | :--- | :--- | :--- | | **Total revenue** | **$330,844** | **$287,597** | | Service revenue | $119,784 | $118,214 | | Custodial revenue | $156,455 | $121,644 | | Interchange revenue | $54,605 | $47,739 | | **Gross profit** | **$224,311** | **$187,138** | | Income from operations | $83,078 | $41,630 | | **Net income** | **$53,915** | **$28,813** | | **Diluted EPS** | **$0.61** | **$0.33** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20consolidated%20statements%20of%20cash%20flows) Operating cash flow remained stable at $64.7 million, while investing activities used significantly less cash due to the absence of large acquisitions Cash Flow Summary (Three months ended April 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $64,738 | $65,429 | | Net cash used in investing activities | $(16,143) | $(269,950) | | Net cash provided by (used in) financing activities | $(56,649) | $51,771 | | **Decrease in cash and cash equivalents** | **$(8,054)** | **$(152,750)** | - The significant decrease in cash used for investing activities in Q1 2025 is due to the absence of large acquisitions, unlike Q1 2024 which included **$256.1 million** for HSA portfolio acquisitions[12](index=12&type=chunk) - The company used **$59.1 million** for common stock repurchases in Q1 2025, contributing to the net cash used in financing activities[12](index=12&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20condensed%20consolidated%20financial%20statements%20%28unaudited%29) Key notes detail the company's single segment, cybersecurity lawsuit, $1.06 billion debt, stock repurchases, and bond forward transactions - The company is subject to a consolidated putative class action lawsuit and regulatory inquiries following a **cybersecurity incident** where a business partner's account was breached; the potential loss cannot be reasonably estimated at this time[38](index=38&type=chunk) - Total long-term debt as of April 30, 2025, was approximately **$1.06 billion**, consisting of **$600 million** in 4.50% Senior Notes due 2029 and **$461.9 million** outstanding under the Revolving Credit Facility[42](index=42&type=chunk) - Under a **$300 million** stock repurchase program authorized in September 2024, the company repurchased **702,000 shares** for **$60.3 million** during the quarter, with **$117.5 million** remaining authorized for repurchase as of April 30, 2025[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - In May 2025, the company executed bond forward transactions with a notional value of **$500 million** to hedge benchmark interest rate risk on expected future transitions of HSA cash[70](index=70&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=17&type=section&id=Item%202.%20Management%27s%20discussion%20and%20analysis%20of%20financial%20condition%20and%20results%20of%20operations) Revenue growth was driven by increased custodial revenue and higher HSA yields, supported by strong growth in key operating metrics and sufficient liquidity [Key Financial and Operating Metrics](index=22&type=section&id=Key%20financial%20and%20operating%20metrics) Key metrics show continued growth, with Total Accounts reaching 17.1 million, Total HSA Assets growing to $31.3 billion, and Adjusted EBITDA increasing 19% Key Operating Metrics (as of April 30, 2025) | Metric (in thousands/millions) | April 30, 2025 | April 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | HSAs (thousands) | 9,886 | 9,097 | 9% | | Total Accounts (thousands) | 17,060 | 16,010 | 7% | | Total HSA Assets (millions) | $31,271 | $27,277 | 15% | | - HSA cash (millions) | $17,066 | $15,850 | 8% | | - HSA investments (millions) | $14,205 | $11,427 | 24% | Non-GAAP Financial Metrics (Three months ended April 30) | (in thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $140,208 | $117,435 | 19% | | Non-GAAP net income | $85,814 | $70,303 | 22% | [Comparison of Results of Operations](index=27&type=section&id=Comparison%20of%20the%20three%20months%20ended%20April%2030%2C%202025%20and%202024) Total revenue increased 15% driven by custodial revenue and higher HSA yields, while operating expenses decreased due to lower G&A costs Revenue Breakdown (Three months ended April 30) | Revenue Source (in thousands) | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Service revenue | $119,784 | $118,214 | $1,570 | 1% | | Custodial revenue | $156,455 | $121,644 | $34,811 | 29% | | Interchange revenue | $54,605 | $47,739 | $6,866 | 14% | | **Total revenue** | **$330,844** | **$287,597** | **$43,247** | **15%** | - The increase in custodial revenue was driven by a higher average annualized yield on HSA cash, which rose to **3.50%** from **2.93%** YoY, and a **12%** increase in the average daily balance of HSA cash[132](index=132&type=chunk) - General and administrative expenses decreased by **33%** YoY, mainly due to lower stock-based compensation expense following the retirement of the former CEO[146](index=146&type=chunk) - Technology and development expenses increased **10%** YoY due to continued investment in the development and security of the company's proprietary technology[144](index=144&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20capital%20resources) The company maintains strong liquidity with $287.9 million in cash and a $1.0 billion revolving credit facility, sufficient for future needs - As of April 30, 2025, the company had **$287.9 million** in cash and cash equivalents[159](index=159&type=chunk) - The company has a **$1.0 billion** senior secured revolving credit facility, with an outstanding balance of **$461.9 million** as of April 30, 2025[161](index=161&type=chunk)[162](index=162&type=chunk) - The company used **$59.1 million** for common stock repurchases during the three months ended April 30, 2025[163](index=163&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20qualitative%20disclosures%20about%20market%20risk) The company is exposed to interest rate risk affecting custodial revenue and debt expense, with a 1% rate increase on debt costing $4.7 million annually, and has begun hedging - A sustained decline in interest rates could negatively affect **custodial revenue**, while a sustained increase could increase it; the company's varied contract terms with Depository and insurance partners help mitigate short-term fluctuations[178](index=178&type=chunk) - The company's revolving credit facility has a variable interest rate; a hypothetical **one percent** increase in the interest rate on the outstanding balance as of April 30, 2025, would result in about **$4.7 million** of additional interest expense over the next 12 months[181](index=181&type=chunk) - In May 2025, the company entered into **derivative contracts** to hedge a portion of the benchmark interest rate risk associated with future transitions of HSA cash[178](index=178&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20procedures) Management concluded disclosure controls were effective as of April 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of April 30, 2025, the company's disclosure controls and procedures were **effective** at the reasonable assurance level[183](index=183&type=chunk) - **No changes** occurred during the quarter ended April 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[184](index=184&type=chunk) Part II. [Other Information](index=34&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20proceedings) The company is not a party to any material litigation outside the normal course of business, except for legal matters described in Note 5 related to a cybersecurity incident - Except as described in Note 5 (Commitments and contingencies), the company is not party to any litigation expected to have a **material adverse effect** on its financial position[185](index=185&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025 - There have been **no material changes** in the company's risk factors since the last Annual Report on Form 10-K[186](index=186&type=chunk) [Issuer Purchases of Equity Securities](index=35&type=section&id=Item%202.%20Unregistered%20sales%20of%20equity%20securities%20and%20use%20of%20proceeds) During the three months ended April 30, 2025, the company repurchased a total of 702,000 shares of its common stock at an average price that varied monthly, as part of its publicly announced repurchase program Common Stock Repurchases (Q1 FY2026) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | February 1 - 28 | 5 | $103.89 | | March 1 - 31 | 228 | $92.24 | | April 1 - 30 | 469 | $82.73 | | **Total** | **702** | **N/A** | [Other Information](index=35&type=section&id=Item%205.%20Other%20information) No directors or officers of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended April 30, 2025 - **No directors or officers** adopted or terminated a Rule 10b5-1 trading plan during the quarter[190](index=190&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data files - The exhibits include **certifications** from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, as well as **Inline XBRL documents**[191](index=191&type=chunk)

Financial Performance - Revenue for Q1 FY2026 was $330.8 million, a 15% increase from $287.6 million in Q1 FY2025[4] - Net income for Q1 FY2026 was $53.9 million, an 87% increase compared to $28.8 million in Q1 FY2025, with non-GAAP net income of $85.8 million, a 22% increase from $70.3 million[5] - Adjusted EBITDA for Q1 FY2026 was $140.2 million, a 19% increase from $117.4 million in Q1 FY2025, representing 42% of revenue[6] - Total revenue for the three months ended April 30, 2025, was $330,844,000, representing a 15% increase from $287,597,000 in the same period of 2024[25] - Net income for the same period was $53,915,000, an 87% increase compared to $28,813,000 in 2024, resulting in a net income margin of 16%[36] - Adjusted EBITDA for the three months ended April 30, 2025, was $140,208,000, a 19% increase from $117,435,000 in 2024, equating to 42% of total revenue[37] - Net income for the three months ended April 30, 2025, was $53,915,000, a 87.2% increase from $28,813,000 in 2024[39] - Non-GAAP net income for the same period was $85,814,000, up 22.1% from $70,303,000 in 2024[39] - GAAP net income per diluted share increased to $0.61 from $0.33, representing an 84.8% growth[39] - Non-GAAP net income per diluted share rose to $0.97, compared to $0.80, a 21.3% increase[39] HSA Growth and Assets - Total HSA Assets as of April 30, 2025, were $31.3 billion, a 15% increase year over year[8] - The number of HSAs increased to 9.9 million, a 9% year-over-year growth, including 770,000 HSAs with investments, up 16% year over year[7] - Total accounts as of April 30, 2025, reached 17.1 million, a 7% increase compared to Q1 FY2025[10] - The company enhanced its mobile experience to secure $31 billion of HSA assets and reduce costs[3] - Total HSA assets reached $31,271,000,000 as of April 30, 2025, reflecting a 15% increase from $27,277,000,000 in 2024[32] Shareholder Actions - The company repurchased 0.7 million shares for $60.3 million during Q1 FY2026, with $117.5 million remaining authorized for repurchase[9] - The company repurchased $59,065,000 worth of common stock during the quarter, indicating a strategic move to enhance shareholder value[27] Future Projections - Management expects revenues for FY2026 to be between $1.285 billion and $1.305 billion, with net income projected between $173 million and $188 million[12] - The outlook for net income for the year ending January 31, 2026, is projected to be between $173,000,000 and $188,000,000[38] - Non-GAAP net income outlook for the same period is estimated to be between $320 million and $335 million[40] - Total adjustments to income before income taxes - GAAP for the year ending January 31, 2026, are expected to be $195 million[40] - The normalized non-GAAP tax rate applied was 25%, which may be adjusted based on significant events[40] - Income before income taxes - Non-GAAP is projected to be between $426 million and $446 million for the year ending January 31, 2026[40] - Diluted weighted-average shares for the outlook period are estimated at 89 million[40] Cash Flow - Cash flows from operating activities for the three months ended April 30, 2025, were $64,738,000, slightly down from $65,429,000 in 2024[27] Compensation - The company reported a total stock-based compensation expense of $14,336,000 for the quarter, significantly down from $32,020,000 in the same period last year[30]

Core Insights - HealthEquity, Inc. reported a strong first quarter for fiscal 2026, achieving record quarterly revenue and Adjusted EBITDA, along with increased guidance for the year [3][4][12] Financial Performance - Revenue for the first quarter ended April 30, 2025, was $330.8 million, a 15% increase from $287.6 million in the same quarter of the previous year [4][11] - Net income reached $53.9 million, or $0.61 per diluted share, marking an 87% increase compared to $28.8 million, or $0.33 per diluted share, in the prior year [5][11] - Non-GAAP net income was $85.8 million, or $0.97 per diluted share, up 22% from $70.3 million, or $0.80 per diluted share, year-over-year [5][11] - Adjusted EBITDA was $140.2 million, a 19% increase from $117.4 million in the same quarter last year, representing 42% of revenue [6][11] Account and Asset Metrics - As of April 30, 2025, HealthEquity managed 9.9 million HSAs, a 9% increase year-over-year, including 770,000 HSAs with investments, which is a 16% increase [7][31] - Total HSA Assets amounted to $31.3 billion, reflecting a 15% increase from the previous year, with $17.1 billion in HSA cash and $14.2 billion in HSA investments [8][32] - Total Accounts reached 17.1 million, including 7.2 million other consumer-directed benefits (CDBs), a 7% increase compared to the same quarter last year [7][11] Stock Repurchase Program - The company repurchased 0.7 million shares of its common stock for $60.3 million during the first quarter, with $117.5 million remaining authorized for future repurchases [9][11] Business Outlook - For the fiscal year ending January 31, 2026, management expects revenues between $1.285 billion and $1.305 billion, with net income projected between $173 million and $188 million [12][39] - Non-GAAP net income is anticipated to be between $320 million and $335 million, resulting in non-GAAP net income per diluted share of $3.61 to $3.78 [12][40]

Core Insights - HealthEquity (NASDAQ:HQY) is expected to announce earnings on June 3, 2025, with a historical trend of positive returns post-earnings announcements, achieving a positive one-day return in 70% of cases over the last five years [1][5] - Analysts predict earnings of $0.81 per share on revenue of $322 million, reflecting growth from the previous year's earnings of $0.80 per share on revenue of $288 million [2] - HealthEquity has a market capitalization of $8.7 billion and generated $1.2 billion in revenue over the past twelve months, with operating profits of $203 million and net income of $97 million [2] Historical Performance - Over the last five years, HealthEquity recorded 20 earnings data points, with 14 positive and 6 negative one-day returns, resulting in a 70% rate of positive returns [5] - The median increase for positive returns was 3.4%, while the median decrease for negative returns was -6.3% [5] - The percentage of positive one-day returns rises to 92% when considering data from the last three years [5] Trading Strategies - Traders can utilize historical trends to inform pre-earnings positioning and consider entering positions before earnings announcements [4] - Post-earnings, traders can analyze the correlation between immediate and medium-term returns to adjust their positions accordingly [4] - A strategy involving correlation between 1D and 5D returns can be employed, where a positive 1D return may lead to a long position for the next 5 days [3][4]

Core Viewpoint - Analysts expect HealthEquity (HQY) to report quarterly earnings of $0.81 per share, reflecting a year-over-year increase of 1.3%, with revenues projected at $321.13 million, up 11.7% from the previous year [1] Earnings Projections - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [2] Revenue Estimates - Analysts estimate 'Revenue- Service' to reach $119.18 million, indicating a year-over-year change of +0.8% [4] - 'Revenue- Custodial' is projected at $151.45 million, reflecting a year-over-year increase of +24.5% [4] - 'Revenue- Interchange' is expected to be $49.71 million, showing a change of +4.1% from the year-ago quarter [4] HSA Metrics - Total HSA Assets are projected to reach $32.13 billion, up from $27.28 billion in the same quarter last year [5] - Total HSA investments are expected to be $14.46 billion, compared to $11.43 billion a year ago [5] Account Estimates - Analysts estimate 'CDBs Accounts' at 6.86 million, slightly down from 6.91 million reported last year [6] - The consensus for 'Total Accounts' stands at 16.92 million, up from 16.01 million in the same quarter of the previous year [6] Cash and Account Projections - Total HSA cash is expected to reach $17.67 billion, compared to $15.85 billion reported last year [7] - HSAs Accounts are projected to be 10.05 million, up from 9.1 million in the same quarter last year [7] Stock Performance - Over the past month, HealthEquity shares have returned +18.4%, outperforming the Zacks S&P 500 composite's +6.7% change, with a Zacks Rank 2 (Buy) indicating potential outperformance in the near future [7]

Core Insights - HealthEquity Community Foundation announced $35,000 in grants to 14 nonprofit organizations, with each receiving $2,500 to support critical community needs [1][3] - The grants focus on four core areas: health and medicine, financial education and literacy, mental health and crisis support, and basic human needs [1][10] - The next grant application cycle will open on August 1, 2025, inviting eligible 501(c)(3) organizations to apply [2] Grant Recipients - Notable recipients include Ronald McDonald House Charities of Kentuckiana, which will use the grant to provide 18 nights of lodging for families with children receiving medical care [3][4] - Other recipients include organizations such as Second Harvest Food Bank, St. Mary's Food Bank, and SW Montana Veterans Food Pantry [8] Commitment to Community - The grants reflect HealthEquity's commitment to creating lasting change through community investment and strategic partnerships with nonprofits [6] - Many grantees are also involved in HealthEquity's Purple with Purpose volunteer program, which encourages employee engagement in community causes [6]

The market expects HealthEquity (HQY) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended April 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on June 3, 2025, might help the stock move higher if these key numbers are bet ...

Summary of Key Points from the Conference Call Industry Overview - **Healthcare Sector**: Anticipation of an Executive Order on drug pricing expected next week, with a probability of over 70% for the implementation of Most Favored Nation (MFN) pricing to reduce the disparity between US and international drug prices [3][9] - **Transportation and Logistics**: Expected reduction in shipments due to tariffs, but supply chain disruptions may provide some offset. Favorable outlook for specific companies like XPO, NSC, and CP, while UPS and SAIA appear oversold [4] Company-Specific Insights - **Alphabet Inc. (GOOGL)**: Notable shift in search dynamics with the first-ever decline in Safari searches, raising concerns about AI search potentially replacing traditional search methods. However, long-term monetization of AI is expected to ramp up [2][27] - **Microsoft Corporation (MSFT)**: Azure reported a 35% year-over-year revenue growth, with a 34% increase in backlog, outperforming Amazon's AWS and Google's GCP. Combined cloud backlog growth of 33% indicates strong core demand despite AI capacity constraints [5][27] - **Tesla, Inc. (TSLA)**: Focus on Robotaxi and affordable model launches, but concerns over tariffs and execution risks contribute to share price volatility [6][27] - **Walmart Inc. (WMT)**: Anticipated Q1 sales are expected to be in line or slightly better, but caution is advised due to product mix and potential impacts on EBIT growth [5][27] - **Capital One Financial Corporation (COF)**: Continued performance exceeding expectations, with FY27 EPS estimates raised to approximately $25. Merger synergies of $2.7 billion expected to phase in from Q2 [7][27] - **MP Materials**: Potential factory closures in the US due to the absence of rare earth magnet flows from China, impacting industries such as aerospace and electric vehicles [7][27] - **GeneDx**: Management confidence in over 30% volume growth for NICU genetic diagnostics this year, with a compelling valuation at 4x projected 2026 revenues [8][27] Market Dynamics - **Quant Strategy**: Increasing EPS risk indicated by Q1 earnings beats and misses, with the Mag 7 model yielding a cumulative long-short return of 10.5% since its launch [2] - **Russell Rebalance**: Notable buy/sell pressure on specific stocks leading into the June 27 rebalance, with BAM, FLUT, and HWM among the top gainers, while SSB and HQY are under pressure [4] Additional Considerations - **Tariffs and Supply Chain**: The impact of tariffs on shipments and the potential for redirected flows to mitigate some negative effects [4] - **AI and Search Trends**: The evolving landscape of search engines and the implications of AI on traditional search methods [2] This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state of the healthcare and technology sectors, along with specific company performances and market dynamics.

Core Viewpoint - HealthEquity, Inc. is set to release its first quarter fiscal 2026 financial results on June 3, 2025, followed by a conference call for investors to discuss the results [1] Financial Results Announcement - The financial results will be announced after the close of regular stock market trading hours on June 3, 2025 [1] - A conference call will be held at 4:30 p.m. Eastern Time on the same day to review the results [1][2] Upcoming Investor Conferences - HealthEquity management will present at several upcoming investor conferences: - BofA Securities 2025 Health Care Conference on May 14, 2025, at 1:40 p.m. Pacific Time in Las Vegas [3] - RBC Global Healthcare Conference on May 20, 2025, at 8:30 a.m. Eastern Time in New York [4] - Goldman Sachs 46th Annual Global Healthcare Conference on June 9, 2025, at 1:20 p.m. Eastern Time in Miami [5] - RBC Financial Technology Conference on June 10, 2025, at 3:20 p.m. Eastern Time in New York [6] Company Overview - HealthEquity administers health savings accounts (HSAs) and other consumer-directed benefits for over 17 million accounts [7] - The company collaborates with employers, benefits advisors, and health and retirement plan providers to enhance healthcare consumer empowerment [7]

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud and unlawful business practices involving HealthEquity, Inc and its officers or directors [1] Financial Performance - On March 18, 2025, HealthEquity reported its financial results for the fourth quarter and fiscal year ending January 31, 2025, with earnings per share that fell short of analyst expectations [3] - The company provided weak guidance for the fiscal year ending January 31, 2026, indicating potential challenges ahead [3] Stock Market Reaction - Following the announcement of disappointing earnings and guidance, HealthEquity's stock price dropped by $17.35 per share, or 17.07%, closing at $84.32 per share on March 19, 2025 [3] Cybersecurity Concerns - HealthEquity's management cited "excess service expense" due to increased cyber threats and fraud attacks, which have been attributed to sophisticated techniques employed by malicious actors [3]