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 December 5, 2017, announcing financial results for its third quarter ended October 31, 2017. |
HEALTHEQUITY, INC. | |||
Date: December 5, 2017 | By: | /s/ Darcy Mott | |
Name: | Darcy Mott | ||
Title: | Executive Vice President and Chief Financial Officer |
• | Revenue of $56.8 million, an increase of 31% compared to Q3 FY17. |
• | Net income of $10.5 million, an increase of 74% compared to Q3 FY17. |
• | Net income per diluted share of $0.17 compared to $0.10 in Q3 FY17. |
• | Adjusted EBITDA of $21.2 million, an increase of 46% compared to Q3 FY17. |
• | Service revenue of $23.0 million, an increase of 22% compared to Q3 FY17. |
• | Custodial revenue of $22.1 million, an increase of 48% compared to Q3 FY17. |
• | Interchange revenue of $11.7 million, an increase of 22% compared to Q3 FY17. |
• | Custodial Cash Assets of $4.6 billion, an increase of 24% compared to Q3 FY17; and |
• | Custodial Investment Assets of $1.0 billion, an increase of 73% compared to Q3 FY17. |
(in thousands, except par value) | October 31, 2017 | January 31, 2017 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 184,367 | $ | 139,954 | |||
Marketable securities, at fair value | 40,711 | 40,405 | |||||
Total cash, cash equivalents and marketable securities | 225,078 | 180,359 | |||||
Accounts receivable, net of allowance for doubtful accounts as of October 31, 2017 and January 31, 2017 were $100 and $75, respectively | 21,458 | 17,001 | |||||
Inventories | 169 | 592 | |||||
Other current assets | 6,106 | 2,867 | |||||
Total current assets | 252,811 | 200,819 | |||||
Property and equipment, net | 6,789 | 5,170 | |||||
Intangible assets, net | 85,450 | 65,020 | |||||
Goodwill | 4,651 | 4,651 | |||||
Deferred tax asset | 4,656 | 1,615 | |||||
Other assets | 1,760 | 1,861 | |||||
Total assets | $ | 356,117 | $ | 279,136 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 3,295 | $ | 3,221 | |||
Accrued compensation | 6,503 | 8,722 | |||||
Accrued liabilities | 9,680 | 3,760 | |||||
Total current liabilities | 19,478 | 15,703 | |||||
Long-term liabilities | |||||||
Other long-term liabilities | 2,226 | 1,456 | |||||
Deferred tax liability | — | 37 | |||||
Total long-term liabilities | 2,226 | 1,493 | |||||
Total liabilities | 21,704 | 17,196 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of October 31, 2017 and January 31, 2017, respectively | — | — | |||||
Common stock, $0.0001 par value, 900,000 shares authorized, 60,652 and 59,538 shares issued and outstanding as of October 31, 2017 and January 31, 2017, respectively | 6 | 6 | |||||
Additional paid-in capital | 255,245 | 232,114 | |||||
Accumulated other comprehensive loss | (188 | ) | (165 | ) | |||
Accumulated earnings | 79,350 | 29,985 | |||||
Total stockholders’ equity | 334,413 | 261,940 | |||||
Total liabilities and stockholders’ equity | $ | 356,117 | $ | 279,136 |
(in thousands, except per share data) | Three months ended October 31, | Nine months ended October 31, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Service revenue | $ | 22,962 | $ | 18,781 | $ | 68,258 | $ | 56,610 | |||||||
Custodial revenue | 22,105 | 14,967 | 62,709 | 43,557 | |||||||||||
Interchange revenue | 11,722 | 9,610 | 38,122 | 31,389 | |||||||||||
Total revenue | 56,789 | 43,358 | 169,089 | 131,556 | |||||||||||
Cost of revenue: | |||||||||||||||
Service costs | 17,251 | 12,675 | 47,824 | 34,471 | |||||||||||
Custodial costs | 2,784 | 2,461 | 8,370 | 7,211 | |||||||||||
Interchange costs | 3,027 | 2,331 | 9,625 | 7,748 | |||||||||||
Total cost of revenue | 23,062 | 17,467 | 65,819 | 49,430 | |||||||||||
Gross profit | 33,727 | 25,891 | 103,270 | 82,126 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 5,892 | 4,391 | 15,707 | 12,764 | |||||||||||
Technology and development | 6,866 | 6,209 | 19,905 | 15,827 | |||||||||||
General and administrative | 6,252 | 5,166 | 18,354 | 15,290 | |||||||||||
Amortization of acquired intangible assets | 1,155 | 1,083 | 3,320 | 3,214 | |||||||||||
Total operating expenses | 20,165 | 16,849 | 57,286 | 47,095 | |||||||||||
Income from operations | 13,562 | 9,042 | 45,984 | 35,031 | |||||||||||
Other expense: | |||||||||||||||
Other expense, net | (395 | ) | (256 | ) | (523 | ) | (934 | ) | |||||||
Total other expense | (395 | ) | (256 | ) | (523 | ) | (934 | ) | |||||||
Income before income taxes | 13,167 | 8,786 | 45,461 | 34,097 | |||||||||||
Income tax provision | 2,685 | 2,778 | 4,004 | 11,783 | |||||||||||
Net income | $ | 10,482 | $ | 6,008 | $ | 41,457 | $ | 22,314 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.17 | $ | 0.10 | $ | 0.69 | $ | 0.38 | |||||||
Diluted | $ | 0.17 | $ | 0.10 | $ | 0.67 | $ | 0.37 | |||||||
Weighted-average number of shares used in computing net income per share: | |||||||||||||||
Basic | 60,562 | 58,938 | 60,160 | 58,338 | |||||||||||
Diluted | 61,868 | 60,073 | 61,703 | 59,693 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 10,482 | $ | 6,008 | $ | 41,457 | $ | 22,314 | |||||||
Other comprehensive gain (loss): | |||||||||||||||
Unrealized gain (loss) on available-for-sale marketable securities, net of tax | 7 | (23 | ) | (23 | ) | (36 | ) | ||||||||
Comprehensive income | $ | 10,489 | $ | 5,985 | $ | 41,434 | $ | 22,278 |
Nine months ended October 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 41,457 | $ | 22,314 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 11,142 | 9,543 | |||||
Amortization of deferred financing costs and other | 97 | 53 | |||||
Deferred taxes | 5,093 | (1,880 | ) | ||||
Stock-based compensation | 10,468 | 6,399 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (4,482 | ) | 244 | ||||
Inventories | 423 | (324 | ) | ||||
Other assets | (3,027 | ) | (3,955 | ) | |||
Accounts payable | (425 | ) | (973 | ) | |||
Accrued compensation | (2,219 | ) | (3,117 | ) | |||
Accrued liabilities | 2,586 | 1,666 | |||||
Other long-term liabilities | 770 | 1,059 | |||||
Net cash provided by operating activities | 61,883 | 31,029 | |||||
Cash flows from investing activities: | |||||||
Purchases of intangible member assets | (15,529 | ) | — | ||||
Acquisition of a business | (2,882 | ) | — | ||||
Purchases of marketable securities | (343 | ) | (275 | ) | |||
Purchase of property and equipment | (3,382 | ) | (2,705 | ) | |||
Purchase of software and capitalized software development costs | (7,654 | ) | (6,799 | ) | |||
Net cash used in investing activities | (29,790 | ) | (9,779 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of common stock options | 12,320 | 4,546 | |||||
Tax benefit from exercise of common stock options | — | 15,909 | |||||
Net cash provided by financing activities | 12,320 | 20,455 | |||||
Increase in cash and cash equivalents | 44,413 | 41,705 | |||||
Beginning cash and cash equivalents | 139,954 | 83,641 | |||||
Ending cash and cash equivalents | $ | 184,367 | $ | 125,346 | |||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Purchases of property and equipment included in accounts payable or accrued liabilities at period end | $ | 238 | $ | 569 | |||
Purchases of software and capitalized software development costs included in accounts payable or accrued liabilities at period end | 501 | 185 | |||||
Purchases of intangible member assets accrued at period end | 3,429 | — |
Three months ended October 31, | Nine months ended October 31, | |||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of revenue | $ | 720 | $ | 462 | $ | 1,903 | $ | 1,258 | ||||||||
Sales and marketing | 561 | 364 | 1,403 | 930 | ||||||||||||
Technology and development | 831 | 487 | 2,365 | 1,290 | ||||||||||||
General and administrative | 1,553 | 755 | 4,797 | 2,921 | ||||||||||||
Total stock-based compensation expense | $ | 3,665 | $ | 2,068 | $ | 10,468 | $ | 6,399 |
October 31, 2017 | October 31, 2016 | % Change | January 31, 2017 | |||||||||
HSA Members | 3,012,968 | 2,378,353 | 27 | % | 2,746,132 | |||||||
Average HSA Members - Year-to-date | 2,872,744 | 2,278,994 | 26 | % | 2,339,091 | |||||||
Average HSA Members - Quarter-to-date | 2,977,367 | 2,354,227 | 26 | % | 2,519,382 | |||||||
HSA Members with investments | 98,257 | 58,226 | 69 | % | 65,906 |
(in thousands, except percentages) | October 31, 2017 | October 31, 2016 | % Change | January 31, 2017 | |||||||||||
Custodial cash | $ | 4,592,658 | $ | 3,713,290 | 24 | % | $ | 4,380,487 | |||||||
Custodial investments | 987,050 | 570,553 | 73 | % | 658,580 | ||||||||||
Total custodial assets | $ | 5,579,708 | $ | 4,283,843 | 30 | % | $ | 5,039,067 | |||||||
Average daily custodial cash - Year-to-date | $ | 4,469,641 | $ | 3,596,571 | 24 | % | $ | 3,661,058 | |||||||
Average daily custodial cash - Quarter-to-date | $ | 4,550,327 | $ | 3,669,480 | 24 | % | $ | 3,854,518 |
Three months ended October 31, | Nine months ended October 31, | |||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 10,482 | $ | 6,008 | $ | 41,457 | $ | 22,314 | ||||||||
Interest income | (185 | ) | (137 | ) | (521 | ) | (385 | ) | ||||||||
Interest expense | 69 | 69 | 205 | 206 | ||||||||||||
Income tax provision | 2,685 | 2,778 | 4,004 | 11,783 | ||||||||||||
Depreciation and amortization | 2,851 | 2,335 | 7,822 | 6,329 | ||||||||||||
Amortization of acquired intangible assets | 1,155 | 1,083 | 3,320 | 3,214 | ||||||||||||
Stock-based compensation expense | 3,665 | 2,068 | 10,468 | 6,399 | ||||||||||||
Other (1) | 511 | 323 | 839 | 1,113 | ||||||||||||
Adjusted EBITDA | $ | 21,233 | $ | 14,527 | $ | 67,594 | $ | 50,973 |
(1) | For the three months ended October 31, 2017 and 2016, Other consisted of non-income-based taxes of $113 and $86, acquisition-related costs of $398 and $10, and other costs of $0 and $237, respectively. For the nine months ended October 31, 2017 and 2016, Other consisted of non-income based taxes of $303 and $260, acquisition-related costs of $482 and $595, and other costs of $54 and $258, respectively. |
Outlook for the year ending | |
(in millions) | January 31, 2018 |
Net income | $43 - $45 |
Income tax provision | 5 - 6 |
Depreciation and amortization | ~ 11 |
Amortization of acquired intangible assets | ~ 4 |
Stock-based compensation expense | ~ 14 |
Other | ~ 3 |
Adjusted EBITDA | $80 - $83 |
Three months ended | Nine months ended | Outlook for the year ending | |||||
(in millions, except per share data) | October 31, 2017 | October 31, 2017 | January 31, 2018 | ||||
Net income | $10 | $ | 41 | $43 - $45 | |||
Stock compensation, net of tax (1) | 2 | 6 | ~ 9 | ||||
Excess tax benefit due to adoption of ASU 2016-09 | (2 | ) | (12 | ) | ~ (13) | ||
Non-GAAP net income | $10 | $35 | $39 - $41 | ||||
Diluted weighted-average shares used in computing GAAP and Non-GAAP per share amounts | 62 | 62 | 62 | ||||
Non-GAAP net income per diluted share (2) | $0.17 | $0.57 | $0.64 - $0.66 |