Form 8-K |
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) |
99.1 | Press release issued by HealthEquity, Inc. dated September 5, 2017, announcing financial results for its second quarter ended July 31, 2017. |
HEALTHEQUITY, INC. | |||
Date: September 5, 2017 | By: | /s/ Darcy Mott | |
Name: | Darcy Mott | ||
Title: | Executive Vice President and Chief Financial Officer |
• | Revenue of $56.9 million, an increase of 29% compared to Q2 FY17. |
• | Net income of $16.9 million, an increase of 106% compared to Q2 FY17. |
• | Net income per diluted share of $0.27 compared to $0.14 in Q2 FY17. |
• | Adjusted EBITDA of $23.9 million, an increase of 30% compared to Q2 FY17. |
• | Service revenue of $22.8 million, an increase of 21% compared to Q2 FY17. |
• | Custodial revenue of $21.3 million, an increase of 44% compared to Q2 FY17. |
• | Interchange revenue of $12.8 million, an increase of 21% compared to Q2 FY17. |
• | Custodial Cash Assets of $4.5 billion, an increase of 23% compared to Q2 FY17; and |
• | Custodial Investment Assets of $0.9 billion, an increase of 61% compared to Q2 FY17. |
(in thousands, except par value) | July 31, 2017 | January 31, 2017 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 169,721 | $ | 139,954 | |||
Marketable securities, at fair value | 40,581 | 40,405 | |||||
Total cash, cash equivalents and marketable securities | 210,302 | 180,359 | |||||
Accounts receivable, net of allowance for doubtful accounts as of July 31, 2017 and January 31, 2017 were $45 and $75, respectively | 20,904 | 17,001 | |||||
Inventories | 339 | 592 | |||||
Other current assets | 8,078 | 2,867 | |||||
Total current assets | 239,623 | 200,819 | |||||
Property and equipment, net | 6,080 | 5,170 | |||||
Intangible assets, net | 73,827 | 65,020 | |||||
Goodwill | 4,651 | 4,651 | |||||
Deferred tax asset | 5,054 | 1,615 | |||||
Other assets | 1,709 | 1,861 | |||||
Total assets | $ | 330,944 | $ | 279,136 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 1,594 | $ | 3,221 | |||
Accrued compensation | 6,520 | 8,722 | |||||
Accrued liabilities | 4,829 | 3,760 | |||||
Total current liabilities | 12,943 | 15,703 | |||||
Long-term liabilities | |||||||
Other long-term liabilities | 2,067 | 1,456 | |||||
Deferred tax liability | — | 37 | |||||
Total long-term liabilities | 2,067 | 1,493 | |||||
Total liabilities | 15,010 | 17,196 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of July 31, 2017 and January 31, 2017, respectively | — | — | |||||
Common stock, $0.0001 par value, 900,000 shares authorized, 60,399 and 59,538 shares issued and outstanding as of July 31, 2017 and January 31, 2017, respectively | 6 | 6 | |||||
Additional paid-in capital | 247,255 | 232,114 | |||||
Accumulated other comprehensive loss | (195 | ) | (165 | ) | |||
Accumulated earnings | 68,868 | 29,985 | |||||
Total stockholders’ equity | 315,934 | 261,940 | |||||
Total liabilities and stockholders’ equity | $ | 330,944 | $ | 279,136 |
(in thousands, except per share data) | Three months ended July 31, | Six months ended July 31, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Service revenue | $ | 22,809 | $ | 18,835 | $ | 45,296 | $ | 37,829 | |||||||
Custodial revenue | 21,285 | 14,779 | 40,604 | 28,590 | |||||||||||
Interchange revenue | 12,785 | 10,571 | 26,400 | 21,779 | |||||||||||
Total revenue | 56,879 | 44,185 | 112,300 | 88,198 | |||||||||||
Cost of revenue: | |||||||||||||||
Service costs | 14,998 | 10,539 | 30,573 | 21,796 | |||||||||||
Custodial costs | 2,785 | 2,394 | 5,586 | 4,750 | |||||||||||
Interchange costs | 3,294 | 2,698 | 6,598 | 5,417 | |||||||||||
Total cost of revenue | 21,077 | 15,631 | 42,757 | 31,963 | |||||||||||
Gross profit | 35,802 | 28,554 | 69,543 | 56,235 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 5,194 | 4,190 | 9,815 | 8,373 | |||||||||||
Technology and development | 6,797 | 4,993 | 13,039 | 9,618 | |||||||||||
General and administrative | 6,234 | 5,550 | 12,102 | 10,124 | |||||||||||
Amortization of acquired intangible assets | 1,082 | 1,082 | 2,165 | 2,131 | |||||||||||
Total operating expenses | 19,307 | 15,815 | 37,121 | 30,246 | |||||||||||
Income from operations | 16,495 | 12,739 | 32,422 | 25,989 | |||||||||||
Other expense: | |||||||||||||||
Other expense, net | (38 | ) | (37 | ) | (128 | ) | (678 | ) | |||||||
Total other expense | (38 | ) | (37 | ) | (128 | ) | (678 | ) | |||||||
Income before income taxes | 16,457 | 12,702 | 32,294 | 25,311 | |||||||||||
Income tax provision (benefit) | (489 | ) | 4,469 | 1,319 | 9,005 | ||||||||||
Net income | $ | 16,946 | $ | 8,233 | $ | 30,975 | $ | 16,306 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.28 | $ | 0.14 | $ | 0.52 | $ | 0.28 | |||||||
Diluted | $ | 0.27 | $ | 0.14 | $ | 0.50 | $ | 0.27 | |||||||
Weighted-average number of shares used in computing net income per share: | |||||||||||||||
Basic | 60,173 | 58,246 | 59,955 | 58,035 | |||||||||||
Diluted | 61,765 | 59,651 | 61,604 | 59,501 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 16,946 | $ | 8,233 | $ | 30,975 | $ | 16,306 | |||||||
Other comprehensive gain (loss): | |||||||||||||||
Unrealized gain (loss) on available-for-sale marketable securities, net of tax | (4 | ) | 27 | (30 | ) | (12 | ) | ||||||||
Comprehensive income | $ | 16,942 | $ | 8,260 | $ | 30,945 | $ | 16,294 |
Six months ended July 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 30,975 | $ | 16,306 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 7,136 | 6,125 | |||||
Amortization of deferred financing costs and other | 27 | 36 | |||||
Deferred taxes | 4,699 | (738 | ) | ||||
Stock-based compensation | 6,803 | 4,331 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (3,873 | ) | (2,373 | ) | |||
Inventories | 253 | (79 | ) | ||||
Other assets | (4,073 | ) | (5,245 | ) | |||
Accounts payable | (1,495 | ) | (1,069 | ) | |||
Accrued compensation | (2,202 | ) | (3,423 | ) | |||
Accrued liabilities | 900 | 827 | |||||
Other long-term liabilities | 611 | 840 | |||||
Net cash provided by operating activities | 39,761 | 15,538 | |||||
Cash flows from investing activities: | |||||||
Purchases of intangible member assets | (6,515 | ) | — | ||||
Acquisition of a business | (3,000 | ) | — | ||||
Purchases of marketable securities | (224 | ) | (177 | ) | |||
Purchase of property and equipment | (2,161 | ) | (1,250 | ) | |||
Purchase of software and capitalized software development costs | (5,166 | ) | (3,960 | ) | |||
Net cash used in investing activities | (17,066 | ) | (5,387 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of common stock options | 7,072 | 1,128 | |||||
Tax benefit from exercise of common stock options | — | 14,249 | |||||
Net cash provided by financing activities | 7,072 | 15,377 | |||||
Increase in cash and cash equivalents | 29,767 | 25,528 | |||||
Beginning cash and cash equivalents | 139,954 | 83,641 | |||||
Ending cash and cash equivalents | $ | 169,721 | $ | 109,169 | |||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Purchases of property and equipment included in accounts payable or accrued liabilities at period end | $ | 53 | $ | 379 | |||
Purchases of software and capitalized software development costs included in accounts payable or accrued liabilities at period end | 69 | 116 | |||||
Purchases of intangible member assets accrued at period end | 270 | — | |||||
Exercise of common stock options receivable | 1,017 | — |
Three months ended July 31, | Six months ended July 31, | |||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of revenue | $ | 692 | $ | 421 | $ | 1,183 | $ | 796 | ||||||||
Sales and marketing | 526 | 353 | 842 | 566 | ||||||||||||
Technology and development | 862 | 446 | 1,534 | 803 | ||||||||||||
General and administrative | 1,714 | 1,289 | 3,244 | 2,166 | ||||||||||||
Total stock-based compensation expense | $ | 3,794 | $ | 2,509 | $ | 6,803 | $ | 4,331 |
July 31, 2017 | July 31, 2016 | % Change | January 31, 2017 | |||||||||
HSA Members | 2,899,646 | 2,300,007 | 26 | % | 2,746,132 | |||||||
Average HSA Members - Year-to-date | 2,820,433 | 2,241,378 | 26 | % | 2,339,091 | |||||||
Average HSA Members - Quarter-to-date | 2,858,087 | 2,270,896 | 26 | % | 2,519,382 | |||||||
HSA Members with investments | 86,868 | 52,722 | 65 | % | 65,906 |
(in thousands, except percentages) | July 31, 2017 | July 31, 2016 | % Change | January 31, 2017 | |||||||||||
Custodial cash | $ | 4,502,841 | $ | 3,658,245 | 23 | % | $ | 4,380,487 | |||||||
Custodial investments | 871,524 | 542,331 | 61 | % | 658,580 | ||||||||||
Total custodial assets | $ | 5,374,365 | $ | 4,200,576 | 28 | % | $ | 5,039,067 | |||||||
Average daily custodial cash - Year-to-date | $ | 4,429,299 | $ | 3,560,117 | 24 | % | $ | 3,661,058 | |||||||
Average daily custodial cash - Quarter-to-date | $ | 4,448,090 | $ | 3,602,152 | 23 | % | $ | 3,854,518 |
Three months ended July 31, | Six months ended July 31, | |||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 16,946 | $ | 8,233 | $ | 30,975 | $ | 16,306 | ||||||||
Interest income | (179 | ) | (128 | ) | (336 | ) | (248 | ) | ||||||||
Interest expense | 69 | 69 | 136 | 137 | ||||||||||||
Income tax provision (benefit) | (489 | ) | 4,469 | 1,319 | 9,005 | |||||||||||
Depreciation and amortization | 2,573 | 2,097 | 4,971 | 3,994 | ||||||||||||
Amortization of acquired intangible assets | 1,082 | 1,082 | 2,165 | 2,131 | ||||||||||||
Stock-based compensation expense | 3,793 | 2,509 | 6,803 | 4,331 | ||||||||||||
Other (1) | 148 | 96 | 328 | 790 | ||||||||||||
Adjusted EBITDA | $ | 23,943 | $ | 18,427 | $ | 46,361 | $ | 36,446 |
(1) | For the three months ended July 31, 2017 and 2016, Other consisted of non-income-based taxes of $102 and $86, and acquisition-related costs of $46 and $10, respectively. For the six months ended July 31, 2017 and 2016, Other consisted of non-income based taxes of $190 and $172, acquisition-related costs of $84 and $595, and other costs of $54 and $23, respectively. |
Outlook for the year ending | |
(in millions) | January 31, 2018 |
Net income | $41 - $45 |
Income tax provision | 8 - 9 |
Depreciation and amortization | ~ 11 |
Amortization of acquired intangible assets | ~ 4 |
Stock-based compensation expense | ~ 14 |
Other | ~ 1 |
Adjusted EBITDA | $79 - $84 |
Three months ended | Six months ended | Outlook for the year ending | |||||
(in millions, except per share data) | July 31, 2017 | July 31, 2017 | January 31, 2018 | ||||
Net income | $17 | $ | 31 | $41 - $45 | |||
Stock compensation, net of tax (1) | 2 | 4 | ~ 9 | ||||
Excess tax benefit due to adoption of ASU 2016-09 | (6 | ) | (10 | ) | ~ (11) | ||
Non-GAAP net income | $13 | $25 | $39 - $43 | ||||
Diluted weighted-average shares used in computing GAAP and Non-GAAP per share amounts | 62 | 62 | 62 | ||||
Non-GAAP net income per diluted share | $0.21 | $0.40 | $0.64 - $0.68 |