Financial Data and Key Metrics Changes - Revenue increased by 15% year over year, reaching $119.8 million for the first quarter [19] - Adjusted EBITDA rose by 19% to $140.2 million, with adjusted EBITDA as a percentage of revenue at 42% compared to 41% in the previous year [21] - Net income for the first quarter was $53.9 million or $0.61 per share on a GAAP basis, while non-GAAP net income was $85.8 million or $0.97 per share [21] - Custodial revenue grew by 29% to a record $156.5 million [20] - Fraud reimbursements decreased significantly from $11 million in Q4 to $3 million in Q1 [20][21] Business Line Data and Key Metrics Changes - Health Savings Accounts (HSAs) grew by 9%, with total accounts increasing by 7% [6] - Cash and Depository (CDB) accounts grew by 4%, with net CDB account growth of 260,000 year over year [6] - HSA assets increased by $4 billion year over year, totaling over $31 billion [6][7] - The number of HSA members who invest grew by 16%, driving invested assets up by 24% to $14.2 billion [7] Market Data and Key Metrics Changes - HealthEquity serves nearly a quarter of all HSAs in the USA, reflecting market share growth [8] - The average balances of HSA members grew by 6% this year [7] - The annualized yield on HSA cash was 3.5% for the quarter [20] Company Strategy and Development Direction - The company is focusing on expanding its Member First secure mobile experience and leveraging AI technology to enhance claims processing and member satisfaction [9][10] - HealthEquity is advocating for legislative changes to expand HSA access, particularly for working seniors eligible for Medicare [15][18] - The company aims to help employers reduce healthcare costs while empowering employees to build health security [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the enterprise pipeline and selling season despite softer macroeconomic conditions [7][30] - The company is cautious about the macro impact on job creation and slower GDP growth affecting new account sales [31] - Management believes that the proposed budget bill could significantly expand the addressable market for HSAs, potentially allowing 20 million more families access [16][18] Other Important Information - The company repurchased approximately $60 million of its outstanding shares during the quarter [22] - HealthEquity is committed to reducing fraud costs to one basis point of total HSA assets per year [21][26] Q&A Session Summary Question: What is the reason for the slowdown in HSA selling conditions? - Management noted that the current sales are lower than last year but still higher than two years ago, expressing optimism about the enterprise pipeline and the potential for growth despite macroeconomic challenges [30] Question: What is the duration of the locked-in rates from forward treasury contracts? - The company locked in rates for five-year treasury contracts to enhance rate migration [33] Question: How much of the fraud costs above the one basis point are included in the guidance? - Management indicated that they are not changing their outlook based on the current quarter's fraud costs, which were in line with expectations [39] Question: Can you clarify the net increase in the addressable market due to proposed legislation? - Management clarified that the net increase is 20 million, considering both Medicare Part A individuals and those on exchanges [42] Question: How is the company tracking towards app downloads and security measures? - The company reported 1.2 million app downloads and is focused on enhancing security through mobile authentication methods [49] Question: Has there been any fallout from elevated fraud levels on enterprise retention? - Management confirmed that there has been no fallout from fraud, with retention rates higher than in previous years [54] Question: Is the AI technology already impacting service costs? - Management stated that while they do not break out exact costs, AI is expected to help reduce service costs over time by automating interactions [100]

Core Insights - Health Savings Accounts (HSAs) provide a triple-tax advantage, making medical care more affordable [1][5] - Contribution limits for HSAs are set to increase in 2025 and 2026, with specific amounts for self-only and family coverage [16][17] - Eligibility requirements for contributing to an HSA include being enrolled in a high-deductible health plan (HDHP) and not having a general purpose flexible spending account (FSA) [6][18] HSA Contribution Limits - In 2025, the maximum HSA contribution is $4,300 for self-only coverage and $8,550 for families, with an additional $1,000 catch-up contribution for those aged 55 and older [16] - In 2026, the maximum HSA contribution increases to $4,400 for self-only coverage and $8,750 for families, with the same catch-up contribution allowance [17] HSA Eligibility Requirements - To contribute to an HSA, individuals must be enrolled in an HSA-eligible plan, not have a general purpose FSA, not be enrolled in Medicare, and not be claimed as a dependent [6][18] High-Deductible Health Plans (HDHP) - HDHPs must meet specific deductible and maximum out-of-pocket limit thresholds to be compatible with HSAs [7][9] - Preventive care services are typically covered at no charge before the deductible is met, but other services require out-of-pocket payments until the deductible is reached [8][11] HSA Benefits - HSAs allow for pretax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses [5] - Unused HSA funds roll over year to year, providing flexibility for future medical expenses [12] Contribution Deadlines - The deadline for HSA contributions for the tax year is April 15 of the following year, allowing individuals to contribute for the previous year until that date [15]