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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

March 18, 2019

Commission File Number: 001-36568

 
 
 
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)

15 West Scenic Pointe Drive
Suite 100
Draper, Utah 84020
(801) 727-1000

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

Not Applicable
(Former name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Item 2.02    Results of Operations and Financial Condition
On March 18, 2019, HealthEquity, Inc. issued a press release attached as Exhibit 99.1 to this current report on Form 8-K.
The information in Exhibit 99.1 is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01    Financial Statements and Exhibits

(d) Exhibits

Exhibit No.    Description

99.1






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
HEALTHEQUITY, INC.
Date: March 18, 2019
By:
 
/s/ Darcy Mott
 
Name:
 
Darcy Mott
 
Title:
 
Executive Vice President and Chief Financial Officer






EXHIBIT INDEX

Exhibit no.
Description
99.1



Exhibit
HealthEquity Reports Fourth Quarter and Fiscal Year Ended January 31, 2019 Financial Results
Highlights of the fiscal year include:
•
Revenue of $287.2 million, an increase of 25% compared to FY18.
•
Net income of $73.9 million, an increase of 56% compared to FY18.
•
Net income per diluted share of $1.17, compared to $0.77 in FY18.
•
Non-GAAP net income per diluted share of $1.19 compared to $0.68 in FY18.
•
Adjusted EBITDA of $118.4 million, an increase of 40% compared to FY18.
•
HSA Members of 4.0 million, an increase of 17% compared to FY18.
•
Total Custodial Assets of $8.1 billion, an increase of 19% compared to FY18.
Highlights of the fourth quarter include:
•
Revenue of $75.8 million, an increase of 25% compared to Q4 FY18.
•
Net income of $13.1 million, an increase of 122% compared to Q4 FY18.
•
Net income per diluted share of $0.21, compared to $0.09 in Q4 FY18.
•
Non-GAAP net income per diluted share of $0.27 compared to $0.11 in Q4 FY18.
•
Adjusted EBITDA of $27.3 million, an increase of 60% compared to Q4 FY18.    
Draper, Utah – March 18, 2019 – 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 fourth quarter and fiscal year ended January 31, 2019.
“Our “Purple” team delivered another solid fourth quarter to cap a year of strong growth in fiscal year 2019, which included full-year revenue that increased 25% to $287 million, and Adjusted EBITDA that increased 40% to $118 million,” said Jon Kessler, President and CEO.  “We continue to outpace the market and gain market share as we edged up to 4 million HSA Members and eclipsed $8 billion of custodial assets. We are well positioned to have another great year for fiscal 2020 helping our members to connect health and wealth as we broaden our proprietary platform and deepen our relationships with our Network and Employer Partners.”
Full year financial results
For the year ended January 31, 2019, HealthEquity reported revenue of $287.2 million, an increase of 25% compared to $229.5 million for the year ended January 31, 2018. Revenue consisted of:
•
Service revenue of $100.6 million, an increase of 10% compared to FY18.
•
Custodial revenue of $126.2 million, an increase of 45% compared to FY18.
•
Interchange revenue of $60.5 million, an increase of 19% compared to FY18.
Net income was $73.9 million for the year ended January 31, 2019, compared to $47.4 million for the year ended January 31, 2018.
Net income per diluted share was $1.17 for the year ended January 31, 2019, compared to $0.77 for the year ended January 31, 2018.
Non-GAAP net income per diluted share was $1.19 for the year ended January 31, 2019, compared to $0.68 for the year ended January 31, 2018.
Adjusted EBITDA was $118.4 million for the year ended January 31, 2019, an increase of 40% compared to $84.7 million for the year ended January 31, 2018. Adjusted EBITDA was 41% of revenue for the year ended January 31, 2019, compared to 37% for the year ended January 31, 2018.
As of January 31, 2019, we had $361.5 million of cash and cash equivalents and no outstanding debt. This compares to $240.3 million in cash, cash equivalents and marketable securities and no outstanding debt as of January 31, 2018.



Fourth quarter financial results
For the fourth quarter ended January 31, 2019, HealthEquity reported revenue of $75.8 million, an increase of 25% compared to $60.4 million for the fourth quarter ended January 31, 2018. Revenue consisted of:
•
Service revenue of $25.8 million, an increase of 10% compared to Q4 FY18.
•
Custodial revenue of $35.5 million, an increase of 45% compared to Q4 FY18.
•
Interchange revenue of $14.5 million, an increase of 15% compared to Q4 FY18.
Net income was $13.1 million for the fourth quarter ended January 31, 2019, compared to $5.9 million for the fourth quarter ended January 31, 2018.
Net income per diluted share was $0.21 for the fourth quarter ended January 31, 2019, compared to $0.09 for the fourth quarter ended January 31, 2018.
Non-GAAP net income per diluted share was $0.27 for the fourth quarter ended January 31, 2019, compared to $0.11 for the fourth quarter ended January 31, 2018.
Adjusted EBITDA was $27.3 million for the fourth quarter ended January 31, 2019, an increase of 60% compared to $17.1 million for the fourth quarter ended January 31, 2018.
HSA Member and Custodial asset metrics
The total number of HSAs for which we serve as a non-bank custodian ("HSA Members") as of January 31, 2019 was 4.0 million, an increase of 17% from 3.4 million as of January 31, 2018. Total Active HSA Members as of January 31, 2019 was 3.2 million, an increase of 13% from 2.9 million as of January 31, 2018. Total HSA Members with investments as of January 31, 2019 was 163,000, an increase of 34% from 122,000 as of January 31, 2018.
Total Custodial Assets as of January 31, 2019 was $8.1 billion, an increase of 19% year over year, consisting of:
•
Custodial Cash Assets of $6.4 billion, an increase of 17% compared to January 31, 2018; and
•
Custodial Investment Assets of $1.7 billion, an increase of 30% compared to January 31, 2018.
Business outlook
For the year ending January 31, 2020, we expect our revenue to be between $333 million and $339 million. Our outlook for net income is a range of $58 million to $62 million, resulting in a net income per diluted share range of $0.89 to $0.95. Our Adjusted EBITDA outlook is a range of $133 million to $138 million. We also expect our non-GAAP net income to be in a range between $80 million and $84 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 24%, 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 $1.23 to $1.29 (based on an estimated 65 million 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 Monday, March 18, 2019 to discuss the fiscal year 2019 fourth quarter and full year financial results. The conference call will be accessible by dialing 844-791-6252, or 661-378-9636 for international callers, and referencing conference ID 6796248. 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, which is a non-GAAP financial measure. 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, 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.
About HealthEquity
HealthEquity connects health and wealth, delivering health savings account (HSA), 401(k) and other consumer driven health and retirement solutions in partnership with over 45,000 employers and 141 health, retirement and other benefit plan providers nationwide. HealthEquity members have access to its end-to-end platform and remarkable “purple” service to become consumers of healthcare while building health and retirement savings for tomorrow. HealthEquity is the custodian of $8.1 billion in assets for 4.0 million HSA members nationwide. For more information, visit www.healthequity.com.
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 our industry, business strategy, plans, goals and expectations concerning our markets and market position, product expansion, future operations, expenses and other results of operations, revenue, margins, profitability, future efficiencies, tax rates, 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 in this press release.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to be correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, risks related to the following:
•
our ability to compete effectively in a rapidly evolving healthcare industry;
•
our dependence on the continued availability and benefits of tax-advantaged health savings accounts;
•
the significant competition we face and may face in the future, including from those with greater resources than us;
•
our reliance on the availability and performance of our technology and communications systems;
•
recent and potential future cybersecurity breaches of our technology and communications systems and other data interruptions, including resulting costs and liabilities, reputational damage and loss of business;
•
the current uncertain healthcare environment, including changes in healthcare programs and expenditures and related regulations;
•
our ability to comply with current and future privacy, healthcare, tax, investment advisor and other laws applicable to our business;
•
our reliance on partners and third party vendors for distribution and important services;
•
our ability to successfully identify, acquire and integrate additional portfolio purchases or acquisition targets;
•
our ability to develop and implement updated features for our technology and communications systems and successfully manage our growth;
•
our ability to protect our brand and other intellectual property rights; and
•
our reliance on our management team and key team members.
For a detailed discussion of these and other risk factors, please refer to the risks detailed in our 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. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information,



future events or otherwise. Forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

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





HealthEquity, Inc. and its subsidiaries
Consolidated balance sheets (unaudited)
(in thousands, except par value)
January 31, 2019

 
January 31, 2018

Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
361,475

 
$
199,472

Marketable securities, at fair value
—

 
40,797

Total cash, cash equivalents and marketable securities
361,475

 
240,269

Accounts receivable, net of allowance for doubtful accounts of $125 and $208 as of January 31, 2019 and 2018, respectively
25,668

 
21,602

Inventories
—

 
—

Other current assets
7,534

 
3,525

Total current assets
394,677

 
265,396

Property and equipment, net
8,223

 
7,836

Intangible assets, net
79,666

 
83,635

Goodwill
4,651

 
4,651

Deferred tax asset
1,677

 
5,461

Other assets
21,122

 
2,180

Total assets
$
510,016

 
$
369,159

Liabilities and stockholders’ equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
3,520

 
$
2,420

Accrued compensation
16,981

 
12,549

Accrued liabilities
8,552

 
5,521

Total current liabilities
29,053

 
20,490

Long-term liabilities
 
 
 
Other long-term liabilities
2,968

 
2,395

Deferred tax liability
916

 
—

Total long-term liabilities
3,884

 
2,395

Total liabilities
32,937

 
22,885

Commitments and contingencies
 
 
 
Stockholders’ equity
 
 
 
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of January 31, 2019 and 2018
—

 
—

Common stock, $0.0001 par value, 900,000 shares authorized, 62,446 and 60,825 shares issued and outstanding as of January 31, 2019 and 2018, respectively
6

 
6

Additional paid-in capital
305,223

 
261,237

Accumulated other comprehensive loss, net
—

 
(269
)
Accumulated earnings
171,850

 
85,300

Total stockholders’ equity
477,079

 
346,274

Total liabilities and stockholders’ equity
$
510,016

 
$
369,159





HealthEquity, Inc. and its subsidiaries
Consolidated statements of operations and comprehensive income (unaudited)
(in thousands, except per share data)
Three months ended January 31,
 
 
Year ended January 31,
 
2019

 
2018

 
2019

 
2018

Revenue
 
 
 
 
 
 
 
   Service revenue
$
25,767

 
$
23,361

 
$
100,564

 
$
91,619

   Custodial revenue
35,465

 
24,451

 
126,178

 
87,160

   Interchange revenue
14,545

 
12,624

 
60,501

 
50,746

   Total revenue
75,777

 
60,436

 
287,243

 
229,525

 Cost of revenue
 
 
 
 
 
 
 
   Service costs
24,050

 
22,602

 
76,858

 
70,426

   Custodial costs
3,632

 
3,030

 
14,124

 
11,400

   Interchange costs
3,650

 
3,158

 
15,068

 
12,783

   Total cost of revenue
31,332

 
28,790

 
106,050

 
94,609

 Gross profit
44,445

 
31,646

 
181,193

 
134,916

 Operating expenses
 
 
 
 
 
 
 
   Sales and marketing
7,893

 
7,432

 
29,498

 
23,139

   Technology and development
10,002

 
7,480

 
35,057

 
27,385

   General and administrative
8,478

 
6,757

 
33,039

 
25,111

   Amortization of acquired intangible assets
1,491

 
1,543

 
5,929

 
4,863

   Total operating expenses
27,864

 
23,212

 
103,523

 
80,498

 Income from operations
16,581

 
8,434

 
77,670

 
54,418

 Other expense
 
 
 
 
 
 
 
   Other expense, net
(221
)
 
(1,706
)
 
(1,852
)
 
(2,229
)
 Total other expense
(221
)
 
(1,706
)
 
(1,852
)
 
(2,229
)
 Income before income taxes
16,360

 
6,728

 
75,818

 
52,189

 Income tax provision
3,241

 
823

 
1,919

 
4,827

 Net income
$
13,119

 
$
5,905

 
$
73,899

 
$
47,362

Net income per share:







 Basic
$
0.21

 
$
0.10

 
$
1.20

 
$
0.79

 Diluted
$
0.21

 
$
0.09

 
$
1.17

 
$
0.77

Weighted-average number of shares used in computing net income per share:
 
 
 
 
 
 
 
 Basic
62,183

 
60,730

 
61,836

 
60,304

 Diluted
63,724

 
62,291

 
63,370

 
61,854

Comprehensive income:











Net income
$
13,119

 
$
5,905

 
$
73,899

 
$
47,362

Other comprehensive loss:











Unrealized loss on available-for-sale marketable securities, net of tax
—

 
(36
)
 
—

 
(59
)
Comprehensive income
$
13,119

 
$
5,869

 
$
73,899

 
$
47,303





HealthEquity, Inc. and its subsidiaries
Consolidated statements of cash flows (unaudited)
 
Year ended January 31,
 
(in thousands)
2019

 
2018

 
2017

 Cash flows from operating activities:
 
 
 
 
 
 Net income
$
73,899

 
$
47,362

 
$
26,376

 Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
18,185

 
15,952

 
13,186

Deferred taxes
408

 
4,306

 
(2,891
)
Stock-based compensation
21,057

 
14,310

 
8,398

Bad debt expense
240

 
133

 
35

Loss on disposal of software development costs and other
933

 
464

 
96

 Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(4,306
)
 
(4,734
)
 
(2,728
)
Other assets
(5,893
)
 
(760
)
 
(1,343
)
Accounts payable
863

 
(581
)
 
567

Accrued compensation
4,432

 
3,827

 
946

Accrued liabilities
3,031

 
484

 
1,729

Other long-term liabilities
573

 
939

 
1,220

 Net cash provided by operating activities
113,422

 
81,702

 
45,591

 Cash flows from investing activities:
 
 
 
 
 
Purchase of marketable securities
(728
)
 
(483
)
 
(379
)
Purchase of property and equipment
(3,869
)
 
(5,458
)
 
(3,645
)
Purchase of software and capitalized software development costs
(9,978
)
 
(10,380
)
 
(9,030
)
Acquisition of intangible member assets
(1,195
)
 
(17,545
)
 
—

Acquisition of a business
—

 
(2,882
)
 
—

Proceeds from sale of marketable securities
41,422

 
—

 
—

 Net cash provided by (used in) investing activities
25,652

 
(36,748
)
 
(13,054
)
 Cash flows from financing activities:
 
 
 
 
 
Proceeds from exercise of common stock options
22,929

 
14,564

 
7,142

Tax benefit from exercise of common stock options
—

 
—

 
16,634

 Net cash provided by financing activities
22,929

 
14,564

 
23,776

 Increase in cash and cash equivalents
162,003

 
59,518

 
56,313

 Beginning cash and cash equivalents
199,472

 
139,954

 
83,641

 Ending cash and cash equivalents
$
361,475

 
$
199,472

 
$
139,954




Stock-based compensation expense (unaudited)
Total stock-based compensation expense included in the consolidated statements of operations and comprehensive income is as follows:
 
Three months ended January 31,
 
 
Year ended January 31,
 
(in thousands)
2019

 
2018

 
2019

 
2018

Cost of revenue
$
829

 
$
691

 
$
2,837

 
$
2,594

Sales and marketing
950

 
627

 
3,536

 
2,030

Technology and development
1,440

 
953

 
5,117

 
3,318

General and administrative
2,377

 
1,571

 
9,567

 
6,368

Total stock-based compensation expense
$
5,596

 
$
3,842

 
$
21,057

 
$
14,310

HSA Members (unaudited)
 
 
 
 
 
 
 
 
% change from

 
% change from

(in thousands, except percentages)
 
January 31, 2019

 
January 31, 2018

 
January 31, 2017

 
2018 to 2019

 
2017 to 2018

HSA Members
 
3,994

 
3,403

 
2,746

 
17
 %
 
24
 %
Average HSA Members - Year-to-date
 
3,608

 
2,952

 
2,339

 
22
 %
 
26
 %
Average HSA Members - Quarter-to-date
 
3,813

 
3,189

 
2,519

 
20
 %
 
27
 %
New HSA Members - Year-to-date
 
679

 
723

 
703

 
(6
)%
 
3
 %
New HSA Members - Quarter-to-date
 
341

 
404

 
422

 
(16
)%
 
(4
)%
Active HSA Members
 
3,241

 
2,863

 
2,378

 
13
 %
 
20
 %
HSA Members with investments
 
163

 
122

 
66

 
34
 %
 
85
 %
Custodial assets (unaudited)
 
 
 
 
 
 
 
 
% change from

 
% change from

(in millions, except percentages)
 
January 31, 2019

 
January 31, 2018

 
January 31, 2017

 
2018 to 2019

 
2017 to 2018

Custodial cash
 
$
6,428

 
$
5,489

 
$
4,380

 
17
%
 
25
%
Custodial investments
 
1,670

 
1,289

 
659

 
30
%
 
96
%
Total custodial assets
 
$
8,098

 
$
6,778

 
$
5,039

 
19
%
 
35
%
Average daily custodial cash - Year-to-date
 
$
5,586

 
$
4,571

 
$
3,661

 
22
%
 
25
%
Average daily custodial cash - Quarter-to-date
 
$
5,837

 
$
4,876

 
$
3,855

 
20
%
 
27
%
Net income reconciliation to Adjusted EBITDA (unaudited)

 
Three months ended January 31,
 
 
Year ended January 31,
 
(in thousands)
 
2019

 
2018

 
2019

 
2018

Net income
 
$
13,119

 
$
5,905

 
$
73,899

 
$
47,362

Interest income
 
(1,027
)
 
(213
)
 
(1,946
)
 
(734
)
Interest expense
 
66

 
69

 
270

 
274

Income tax provision
 
3,241

 
823

 
1,919

 
4,827

Depreciation and amortization
 
3,196

 
3,267

 
12,256

 
11,089

Amortization of acquired intangible assets
 
1,491

 
1,543

 
5,929

 
4,863

Stock-based compensation expense
 
5,596

 
3,842

 
21,057

 
14,310

Other (1)
 
1,606

 
1,850

 
4,998

 
2,689

Adjusted EBITDA
 
$
27,288

 
$
17,086

 
$
118,382

 
$
84,680

(1)
For the three months ended January 31, 2019 and 2018, Other consisted of non-income based taxes of $153 and $136, acquisition-related costs of $1,047 and $1,714, amortization of incremental costs to obtain a contract of $425 and $0, and other costs of ($19) and $0, respectively. For the years ended January 31, 2019 and 2018, Other consisted of non-income based taxes of $487 and $439 acquisition-related costs of $2,121 and $2,197, amortization of incremental costs to obtain a contract of $1,470 and $0, loss on disposal of previously capitalized software development of $676 and $0, and other costs of $244 and $53, respectively.






Reconciliation of net income outlook to Adjusted EBITDA outlook
 
Outlook for the year ending
(in millions)
January 31, 2020
Net income
$58 - 62
Income tax provision
18 - 19
Depreciation and amortization
~ 18
Amortization of acquired intangible assets
~ 6
Stock-based compensation expense
~ 29
Other
~ 4
Adjusted EBITDA
$133 - 138

Reconciliation of Non-GAAP net income per diluted share (unaudited)
 
Three months ended

Year ended

Outlook for the year ending

(in millions, except per share data)
January 31, 2019

January 31, 2019

January 31, 2020

Net income
$13

$74

$58 - $62

Stock compensation, net of tax (1)
4

16

 ~ 22

Excess tax benefit due to adoption of ASU 2016-09
—

(14
)
~ (0)

Non-GAAP net income
$17

$76

$80 - $84

 
 
 
 
Diluted weighted-average shares used in computing GAAP and Non-GAAP per share amounts
64

63

65

Non-GAAP net income per diluted share (2)
$0.27

$1.19

$1.23 - $1.29

(1) For the three months and year ended January 31, 2019, and for the year ending January 31, 2020, the Company used an estimated statutory tax rate of 24% to calculate the net impact of stock-based compensation expense.
(2) Non-GAAP net income per diluted share does not calculate due to rounding.

Certain terms
Term
Definition
HSA
A financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis.
HSA Member
An HSA for which we serve as custodian.
Active HSA Member
An HSA Member that (i) is associated with a Health Plan and Administrator Partner or an Employer Partner, in each case as of the end of the applicable period; or (ii) has held a custodial balance at any point during the previous twelve month period.

Custodial cash assets
Deposits with our federally-insured custodial depository partners and custodial cash deposits invested in an annuity contract with our insurance company partner.
Custodial investments
HSA Members' investments in mutual funds through our custodial investment fund partner.
Employer Partner
Our employer clients.
Health Plan and Administrator Partner
Our Health Plan and Administrator clients.
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, and other certain non-operating items.
Non-GAAP net income
Calculated by adding back to net income all non-cash stock-based compensation expense, net of an estimated statutory tax rate, and the impact of excess tax benefits due to the adoption of ASU 2016-09.
Non-GAAP net income per diluted share
Calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.