HealthEquity Reports First Quarter Ended April 30, 2017 Financial Results

Highlights of the first quarter include:

• Revenue of $55.4 million, an increase of 26% compared to Q1 FY17.
• Net income of $14.0 million, an increase of 74% compared to Q1 FY17.
• Net income per diluted share of $0.23 compared to $0.14 in Q1 FY17.
• Adjusted EBITDA of $22.4 million, an increase of 24% compared to Q1 FY17.                                                                

DRAPER, Utah, June 06, 2017 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ:HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") non-bank custodian, today announced financial results for its first quarter ended April 30, 2017.

Jon Kessler, President and CEO of HealthEquity said, "During the first quarter our team began the fiscal year the way that we ended last year, outpacing the market's 20% growth rate as we grew HSAs by 26% year-over-year, adding nearly 77,000 new HSAs and $189 million in custodial assets in the first quarter. Even more importantly, custodial investments grew by 58% year-over-year, as we continue to succeed in enabling our HSA members to build health savings."

First quarter financial results

For the first quarter ended April 30, 2017, HealthEquity reported revenue of $55.4 million, an increase of 26% compared to $44.0 million for the first quarter ended April 30, 2016. Revenue consisted of:

• Service revenue of $22.5 million, an increase of 18% compared to Q1 FY17.
• Custodial revenue of $19.3 million, an increase of 40% compared to Q1 FY17. 
• Interchange revenue of $13.6 million, an increase of 21% compared to Q1 FY17.

Net income was $14.0 million for the first quarter ended April 30, 2017, compared to $8.1 million for the first quarter ended April 30, 2016.

Net income per diluted share was $0.23 for the first quarter ended April 30, 2017, compared to $0.14 for the first quarter ended April 30, 2016.

Adjusted EBITDA was $22.4 million for the first quarter ended April 30, 2017, an increase of 24% compared to $18.0 million for the first quarter ended April 30, 2016.

HSA Member and Custodial asset metrics

The total number of HSAs for which we serve as a non-bank custodian ("HSA Members") as of April 30, 2017 was 2.8 million, an increase of 26% from 2.2 million as of April 30, 2016.

Total Custodial Assets as of April 30, 2017 was $5.2 billion, an increase of 28% year over year, consisting of:

• Custodial Cash Assets of $4.4 billion, an increase of 24% compared to Q1 FY17; and
• Custodial Investment Assets of $0.8 billion, an increase of 58% compared to Q1 FY17.

Business outlook

We are increasing our business outlook for the year ended January 31, 2018. We are increasing our revenue outlook from a range between $220.0 million and $225.0 million to a range between $222.0 million and $227.0 million, our net income from a range between $30.0 million and $34.0 million to a range between $33.0 million and $37.0 million, our Adjusted EBITDA from a range between $77.0 million and $82.0 million to a range between $78.0 million and $83.0 million. We also expect our non-GAAP net income to be in a range between $38.0 million and $42.0 million. Our non-GAAP net income is calculated by adding back to net income all non-cash stock-based compensation expense, net of an estimated statutory tax rate of 38%, and the impact of excess tax benefits due to the adoption of Accounting Standards Update ("ASU") 2016-09. Our non-GAAP net income outlook results in a non-GAAP net income per diluted share range between $0.62 and $0.67 (based on an estimated 62.0 million diluted weighted-average shares outstanding).

A reconciliation of the non-GAAP financial measures used throughout this release to the most comparable GAAP financial measures is included with the financial tables at the end of this release.

Conference call

HealthEquity management will host a conference call at 5:00 pm (Eastern Time) on Tuesday, June 6, 2017 to discuss the fiscal year 2018 first quarter results. The conference call will be accessible by dialing 844-791-6252, or 661-378-9636 for international callers, and referencing conference ID 23367222. A live audio webcast of the call will also be available on the investor relations section of our website at http://ir.healthequity.com.

Non-GAAP financial Information

To supplement our financial information presented on a GAAP basis, we disclose Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share, 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. Non-GAAP net income is calculated by adding back to net income all non-cash stock-based compensation expense, net of an estimated statutory tax rate of 38%, and the impact of excess tax benefits due to the adoption of ASU 2016-09. Non-GAAP net income per diluted share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.

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 GAAP; 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 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 Securities and Exchange Commission, including, without limitation, our most recent Annual Report on Form 10-K and subsequent periodic and current reports. Past performance is not necessarily indicative of future results. The Company undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

HealthEquity, Inc. and its subsidiaries
Consolidated balance sheets (unaudited)

HealthEquity, Inc. and its subsidiaries
Consolidated statements of operations and comprehensive income (unaudited)

HealthEquity, Inc. and its subsidiaries
Statement of Cash flows (unaudited)

Stock-based compensation expense (unaudited)

Total stock-based compensation expense included in the consolidated statements of operations and comprehensive income is as follows:

HSA Members (unaudited)

Custodial assets (unaudited)

Net income reconciliation to Adjusted EBITDA (unaudited)

^{(1) For the three months ended April 30, 2017 and 2016, Other consisted of non-income-based taxes of $88 and $84, other costs of $54 and $24, and acquisition-related costs of $38 and $585, respectively.}

Reconciliation of Adjusted EBITDA outlook (unaudited)

Reconciliation of non-GAAP net income per diluted share (unaudited)

^{(1) The Company used an estimated statutory tax rate of 38% to calculate the net impact stock-based compensation expense.}

Investor Relations Contact:
Richard Putnam
801-727-1209
rputnam@healthequity.com