HealthEquity Reports First Quarter Ended April 30, 2015 Financial Results
Highlights of the first quarter include:
-
Revenue of
$29.9 million , an increase of 48% compared to Q1 FY15. -
Net income of
$5.0 million , an increase of 83% compared to Q1 FY15. -
Net income per diluted share of
$0.09 compared to$0.08 in Q1 FY15. -
Adjusted EBITDA of
$10.8 million , an increase of 59% compared to Q1 FY15. -
Non-GAAP EPS of
$0.10 per share compared to$0.06 in Q1 FY15. - HSA Members grew to 1.5 million, an increase of 46% compared to Q1 FY15.
-
Total AUM grew to
$2.5 billion , a 50% increase compared to Q1 FY15. - Increase in FY16 guidance.
"In the first quarter, we saw continued success in the key metrics that drive our business with revenue, Adjusted EBITDA, HSA membership and AUM all growing greater than 45%. Over the past year, we added over 466,000 new HSA members and grew AUM by
First quarter financial results
For the first quarter ended
-
Account fee revenue of
$14.4 million , an increase of 39% compared to Q1 FY15. -
Custodial fee revenue of
$8.4 million , an increase of 55% compared to Q1 FY15. -
Card fee revenue of
$6.8 million , an increase of 59% compared to Q1 FY15.
Net income was
Net income per share attributable to diluted common share was
Non-GAAP Adjusted EBITDA was
As of
HSA Member and AUM metrics
The total number of HSAs for which we serve as a non-bank custodian ("HSA Members") as of
Total assets under management ("AUM") as of
-
Cash AUM of
$2.2 billion , an increase of 48% compared toApril 30, 2014 ; and -
Investment AUM of
$345.8 million , an increase of 63% compared toApril 30, 2014 .
Investment AUM was 14% of total AUM as of
Business outlook
For the year ended
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Non-GAAP financial information
To supplement our financial information presented on a GAAP basis, we disclose Adjusted EBITDA, non-GAAP earnings per diluted share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, and non-GAAP operating margin, which are non-GAAP financial measures. We define Adjusted EBITDA as adjusted earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, and other certain non-operating items. We define non-GAAP earnings per diluted share as net income per diluted share, calculated by adding back to net income non-cash stock-based compensation expense, net of tax. Non-GAAP gross profit is calculated by excluding from gross profit stock-based compensation expense attributable to cost of services. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by revenues. Non-GAAP income from operations is calculated by excluding stock-based compensation expense from operating income. Non-GAAP operating margin is the ratio calculated by dividing non-GAAP operating income by revenues.
These 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. The company cautions investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; 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.
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 the company's industry, business strategy, plans, goals and expectations concerning our market position, product expansion, future operations, revenue, margins, profitability, future efficiencies, 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. Forward-looking statements are subject to a number of risks and uncertainties, many of
which involve factors or circumstances that are beyond the control of the company. The company's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, the continued availability of tax-advantaged consumer-directed benefits to employers and employees, the company's ability to acquire and retain new network partners and to cross-sell its products to existing network partners and members, the company's ability to successfully identify, acquire and integrate additional portfolio purchases or acquisition targets, the company's ability to raise awareness among employers and employees about the advantages of adopting and participating in consumer-directed benefits programs, and the company's ability to identify and execute on network partner opportunities. For a detailed discussion of these and
other risk factors, please refer to the risks detailed in the company's filings with the
Condensed consolidated statements of operations and comprehensive income (unaudited)
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Three months ended |
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| (in thousands, except per share data) | 2015 | 2014 |
| Revenue: | ||
| Account fee revenue | $ 14,397 | $ 10,388 |
| Custodial fee revenue | 8,419 | 5,427 |
| Card fee revenue | 6,817 | 4,298 |
| Other revenue | 217 | 118 |
| Total revenue | 29,850 | 20,231 |
| Cost of services: | ||
| Account costs | 8,389 | 6,428 |
| Custodial costs | 1,423 | 938 |
| Card costs | 2,102 | 1,405 |
| Other costs | 30 | 1 |
| Total cost of services | 11,944 | 8,772 |
| Gross profit | 17,906 | 11,459 |
| Operating expenses: | ||
| Sales and marketing | 2,833 | 2,233 |
| Technology and development | 3,524 | 2,186 |
| General and administrative | 3,158 | 1,143 |
| Amortization of acquired intangible assets | 409 | 409 |
| Total operating expenses | 9,924 | 5,971 |
| Income from operations | 7,982 | 5,488 |
| Other expense: | ||
| Loss on revaluation of redeemable convertible preferred stock derivative | — | (735) |
| Other expense, net | (105) | (92) |
| Total other expense | (105) | (827) |
| Income before income taxes | 7,877 | 4,661 |
| Income tax provision | 2,900 | 1,943 |
| Net income | $ 4,977 | $ 2,718 |
| Net income attributable to common stockholders: | ||
| Basic | $ 4,977 | $ 3,849 |
| Diluted | $ 4,977 | $ 3,453 |
| Net income per share attributable to common stockholders: | ||
| Basic | $ 0.09 | $ 0.52 |
| Diluted | $ 0.09 | $ 0.08 |
| Weighted-average number of shares used in computing net income per share attributable to common stockholders: | ||
| Basic | 55,063 | 7,367 |
| Diluted | 57,770 | 43,736 |
| Comprehensive income: | ||
| Net income | $ 4,977 | $ 2,718 |
| Other comprehensive loss: | ||
| Unrealized loss on available-for-sale marketable securities, net of tax | (22) | — |
| Comprehensive income | $ 4,955 | $ 2,718 |
Stock-based compensation expense
Total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive income is as follows:
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Three months ended |
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| (in thousands) | 2015 | 2014 |
| Cost of services | $ 228 | $ 19 |
| Sales and marketing | 228 | 2 |
| Technology and development | 150 | 32 |
| General and administrative | 488 | 12 |
| Total stock-based compensation expense | $ 1,094 | $ 65 |
The following table presents components of our condensed consolidated statements of operations and comprehensive income, adjusted for stock compensation expense:
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Three months ended |
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| (in thousands, except for percentages) | 2015 | 2014 |
| Reconciliation of gross profit to non-GAAP gross profit: | ||
| Gross profit | $ 17,906 | $ 11,459 |
| Excluding: Stock-based compensation expense attributable to cost of services | 228 | 19 |
| Non-GAAP gross profit | $ 18,134 | $ 11,478 |
| Reconciliation of gross margin to non-GAAP gross margin: | ||
| GAAP gross margin | 60 % | 57 % |
| Excluding: Stock-based compensation expense attributable to cost of services | 1 % | —% |
| Non-GAAP gross margin | 61 % | 57 % |
| Reconciliation of income from operations to non-GAAP income from operations: | ||
| Income from operations | $ 7,982 | $ 5,488 |
| Excluding: Stock-based compensation expense | 1,094 | 65 |
| Non-GAAP income from operations | $ 9,076 | $ 5,553 |
| Reconciliation of operating margin to non-GAAP operating margin: | ||
| GAAP operating margin | 27 % | 27 % |
| Excluding: Stock-based compensation expense | 3 % | —% |
| Non-GAAP operating margin | 30 % | 27 % |
Net income reconciliation to Adjusted EBITDA
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Three months ended |
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| (in thousands) | 2015 | 2014 |
| Net income | $ 4,977 | $ 2,718 |
| Income tax provision | 2,900 | 1,943 |
| Depreciation and amortization | 1,341 | 842 |
| Amortization of acquired intangible assets | 409 | 409 |
| Loss on revaluation of redeemable convertible preferred stock derivative liability | — | 735 |
| Stock-based compensation expense | 1,094 | 65 |
| Other (1) | 103 | 92 |
| Total adjustments | $ 5,847 | $ 4,086 |
| Adjusted EBITDA | $ 10,824 | $ 6,804 |
|
(1) For the three months ended |
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HSA Members
|
|
|
% Change |
|
|
| HSA Members | 1,474,327 | 1,008,083 | 46 % | 1,426,785 |
| Average HSA Members - Year-to-date | 1,459,578 | 992,225 | 47 % | 1,087,962 |
| Average HSA Members - Quarter-to-date | 1,459,578 | 992,225 | 47 % | 1,230,256 |
Assets under management (AUM)
| (in thousands, except percentages) |
|
|
% Change |
|
| Cash AUM | $ 2,198,800 | $ 1,488,543 | 48 % | $ 2,075,741 |
| Investment AUM | 345,790 | 212,041 | 63 % | 286,526 |
| Total AUM | $ 2,544,590 | $ 1,700,584 | 50 % | $ 2,362,267 |
| Average daily cash AUM - Year-to-date | $ 2,139,644 | $ 1,459,478 | 47 % | $ 1,553,845 |
| Average daily cash AUM - Quarter-to-date | $ 2,139,644 | $ 1,459,478 | 47 % | $ 1,698,402 |
Net income per diluted share reconciliation to non-GAAP earnings per diluted share
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Three months ended |
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| (in thousands, except per share data) | 2015 | 2014 |
| Net income attributable to common stockholders for diluted earnings per share | $ 4,977 | $ 3,453 |
| GAAP adjustments for participating securities (1) | — | $ (735) |
| Net income | $ 4,977 | $ 2,718 |
| Stock compensation expense, net of tax (2) | 690 | 38 |
| Adjusted net income | $ 5,667 | $ 2,756 |
| GAAP diluted weighted-average number of shares used in computing non-GAAP earnings per diluted share: | 57,770 | 43,736 |
| Non-GAAP earnings per diluted share | $ 0.10 | $ 0.06 |
| (1) The net impact of adjustments required for participating securities in conformity with the two-class method as prescribed by GAAP. | ||
|
(2) The company used an effective tax rate of 36.8% and 41.7% for the three months ended |
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CONTACT: Investors Contact:
Westwicke Partners Bob East / Asher Dewhurst
443-213-0500
bob.east@westwicke.com
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