What changed in this filing

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Item 1. Business

2023-03-30 compared with 2022-03-31 · 115 added, 138 removed, 241 unchanged (51% of the section changed)

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We use our innovative technology to manage consumers' tax-advantaged health savings accounts (“HSAs”) and other consumer-directed benefits (“CDBs”) offered by employers, including flexible spending accounts and health reimbursement arrangements (“FSAs” and “HRAs”), and to administer Consolidated Omnibus Budget Reconciliation Act (“COBRA”), commuter and other benefits.

As part of our services, we and our subsidiaries provide consumers with healthcare bill evaluation and payment processing services, personalized benefit information, including information on treatment options and comparative pricing, access to remote and telemedicine benefits, the ability to earn wellness incentives, and investment advice to grow their tax-advantaged healthcare savings.

As part of our services, we provide consumers with healthcare bill evaluation and payment processing services, personalized benefit information, including information on treatment options and comparative pricing, access to remote and telemedicine benefits, the ability to earn wellness incentives, and investment advice to grow their tax-advantaged healthcare savings.

We believe the shift to greater consumer responsibility for healthcare costs will require a significant portion of consumers under the age of 65 with private health insurance in the United States to use offerings such as ours.

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We reach Clients primarily through relationships with benefits brokers and advisors, integrated partnerships with a network of health plans, benefits administrators, benefits brokers and consultants, and retirement plan recordkeepers, which we call Network Partners, and a sales force that calls on Clients directly.

As of January 31, 2022, our platforms were integrated with 185 Network Partners, and we serve approximately 120,000 Clients.

As of January 31, 2023, our platforms were integrated with more than 200 Network Partners, and we serve more than 120,000 Clients.

We have increased our share of the growing HSA market from 4% in December 2010 to 20% as of December 2022, measured by HSA Assets.

According to Devenir, we are the largest HSA provider by accounts and second largest by assets as of December 2021.

According to Devenir, as of December 2022, we are the largest HSA provider by both accounts and HSA Assets.

In addition, we believe we are the largest provider of other CDBs.

We seek to differentiate ourselves through our proprietary technology, product breadth, ecosystem connectivity, and service-driven culture.

We seek to differentiate ourselves through our service-driven culture, product breadth, ecosystem connectivity, and proprietary technology.

Our proprietary technology allows us to help consumers optimize the value of their HSAs and other CDBs and gain confidence and skills in managing their healthcare costs as part of their financial security.

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Our commuter benefits offering also leverages connectivity to an ecosystem of mass transit, ride hailing, and parking providers.

These strengths reflect our “DEEP Purple” culture of remarkable service to customers and teammates, achieved by driving excellence, ethics, and process into everything we do.

Our business model provides strong visibility into our future operating performance, with the vast majority of our accounts opened before the start of our fiscal year.

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service, custodial, and interchange.

We earn service revenue mainly from fees paid by Clients on a recurring per-account per-month basis.

We earn custodial revenue mainly from HSA Assets held at our members’ direction in federally insured cash deposits, insurance contracts or mutual funds, and from investment of Client-held funds.

We earn service revenue mainly from fees paid by our Network Partners, Clients, and members for the administration services we provide in connection with the HSAs and other CDBs we offer.

We earn custodial revenue mainly from HSA Assets held at our members’ direction in federally insured cash deposits, insurance contracts or mutual funds, and from investment of Client-held funds, which are deposits remitted by Clients and held by us on their behalf to pre-fund and facilitate administration of CDBs.

We earn interchange revenue mainly from fees paid by merchants on payments that our members make using our physical payment cards and on our virtual payment system.

See “Key components of our results of operations” for additional information on our sources of revenue, including the adverse impacts caused by the ongoing COVID-19 pandemic.

See “Key components of our results of operations” for additional information on our sources of revenue, including the adverse impacts caused by the societal and economic changes arising out of the COVID-19 pandemic.

Recent acquisitions

WageWorks acquisition.

On August 30, 2019, we completed our acquisition of WageWorks, Inc.

(the "WageWorks Acquisition") and paid approximately $2.0 billion in cash to WageWorks stockholders, financed through net borrowings of approximately $1.22 billion under our prior term loan facility and approximately $816.9 million of cash on hand.

The key strategy of the WageWorks Acquisition was to enable us to increase the number of our employer sales opportunities, the conversion of these opportunities to Clients, and the value of Clients in generating members, HSA Assets and complementary CDBs.

WageWorks’ historic strength of selling to employers directly and through health

benefits brokers and advisors complemented our distribution through Network Partners.

With WageWorks’ CDB capabilities, we provide employers with a single partner for both HSAs and other CDBs, which is preferred by the vast majority of employers according to research conducted for us by Aite Group.

For Clients that partner with us in this way, we believe we can produce more value by encouraging both CDB participants to contribute to HSAs and HSA-only members to take advantage of tax savings available through other CDBs.

As of January 31, 2022, we had substantially completed our multi-year integration effort and achieved approximately $80 million in annualized ongoing net synergies.

We anticipate generating additional revenue synergies over the longer-term as our combined distribution channels and existing client base take advantage of the broader service offerings and as we continue to drive member engagement.

Luum acquisition.

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Fifth Third Bank HSA portfolio acquisition.

On April 27, 2021, we signed an agreement to acquire the Fifth Third Bank, National Association ("Fifth Third") HSA portfolio, which consisted of $490.0 million of HSA Assets held in approximately 160,000 HSAs in exchange for a purchase price of $60.8 million in cash.

This acquisition closed on September 29, 2021.

In September 2021, we acquired the Fifth Third Bank, National Association ("Fifth Third") HSA portfolio, which consisted of $490.0 million of HSA Assets held in approximately 160,000 HSAs in exchange for a purchase price of $60.8 million in cash.

Further acquisition.

On September 7, 2021, we signed an amended agreement to acquire the Further business (other than Further's voluntary employee beneficiary association business), a leading provider of HSA and other CDB administration services, with approximately 580,000 HSAs and $1.9 billion of HSA Assets, for $455 million in cash (the "Further Acquisition").

This acquisition closed on November 1, 2021.

In November 2021, we acquired the Further business (other than Further's voluntary employee beneficiary association business), a leading provider of HSA and other CDB administration services, with approximately 580,000 HSAs and $1.9 billion of HSA Assets, for $455 million in cash (the "Further Acquisition").

HealthSavings HSA portfolio acquisition.

On December 4, 2021, we signed an agreement to acquire the Health Savings Administrators, L.L.C.

In March 2022, we acquired the Health Savings Administrators, L.L.C.

(“HealthSavings”) HSA portfolio, which consisted of $1.3 billion of HSA Assets held in approximately 87,000 HSAs in exchange for a purchase price of $60 million in cash.

This acquisition closed on March 2, 2022.

Our products and services

Technology platforms.

We offer multiple cloud-based platforms, accessed by our members online via a desktop or mobile device, through which individuals can make health saving and spending decisions, pay healthcare bills, compare treatment options and prices, receive personalized benefit and clinical information, earn wellness incentives, grow their savings and make investment choices.

The platforms provide users with access to services we provide as well as services provided by third parties selected by us or by our Network Partners.

Among other features, our HSA platform includes the capability to present to users medical bills upon adjudication by a health plan, including details such as the amount paid by insurance, specific nature of the medical service provided, and diagnostic code.

Users of our HSA platform can pay these bills from an account of ours or from any bank account, online, via a mobile device, or using our payment card.

All users of our HSA platform gain access to our healthcare consumer specialists, available every hour of every day, via a toll-free telephone number or email.

Our specialists can assist users with such tasks as optimizing the use of tax-advantaged accounts to reduce medical spending or selecting from among medical plans offered by an employer or health plan.

We acquired several other technology platforms as part of the WageWorks Acquisition.

These additional technology platforms are designed to be highly scalable based on an on-demand delivery model that Clients and members may access through a standard web browser on any internet-enabled device, including computers, smart phones, and other mobile devices such as tablet computers.

Our on-demand delivery model for these platforms eliminates the need for our Clients to install and maintain hardware and software in order to support CDB programs and enables us to rapidly implement product enhancements across our entire user base.

We acquired an additional technology platform as part of the Luum Acquisition, which provides Clients with various commuter services, including access to real-time commute data, to help Clients design and implement flexible return-to-office and hybrid-workplace strategies and benefits.

We are working to phase out certain technology platforms that we acquired in the WageWorks Acquisition, which requires us to migrate certain Clients to one of our remaining technology platforms.

We expect to complete these migrations during the fiscal year ending January 31, 2023.

Health savings accounts.

The Medicare Modernization Act of 2003 created HSAs, a tax-exempt trust or custodial account managed by a custodian that is a bank, an insurance company, or a non-bank custodian

specifically authorized by the Internal Revenue Service, or IRS, as meeting certain ownership, capitalization, expertise, and governance requirements.

The Medicare Modernization Act of 2003 created HSAs, a tax-exempt trust or custodial account managed by a custodian that is a bank, an insurance company, or a non-bank custodian specifically authorized by the Internal Revenue Service, or IRS, as meeting certain ownership, capitalization, expertise, and governance requirements.

We are an IRS-approved non-bank custodian of our members' HSAs, designated to serve as both a passive and non-passive non-bank custodian of HSAs.

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Healthcare FSAs are employer-sponsored CDBs that enable employees to set aside pre-tax dollars to pay for eligible healthcare expenses that are not generally covered by insurance, such as co-pays, deductibles and over-the-counter medical products, as well as vision expenses, orthodontia, and medical devices.

Healthcare FSAs can be customized by employers so they have the freedom to determine what eligible expenses may be reimbursed under these arrangements.

Healthcare FSAs can be customized by employers so they have the freedom to

determine what eligible expenses may be reimbursed under these arrangements.

Our employer Clients also realize payroll tax (i.e., FICA and Medicare) savings on the pre-tax contributions made by their employees.

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however, these are subject to the statutory annual limit on total contributions.

with healthcare FSAs, employers realize payroll tax savings on the pre-tax dependent care FSA contributions made by their employees.

As with healthcare FSAs, employers realize payroll tax savings on the pre-tax dependent care FSA contributions made by their employees.

HealthEquity administers the United States Office of Personnel Management's (“OPM”) Federal Flexible Spending Account Program (“FSAFEDS”).

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We handle the accounting and customer services for such terminated employees, as well as interfacing with the carrier regarding the employees’ eligibility for participation in the COBRA program.

The American Rescue Plan Act of 2021 provided a temporary 100% subsidy of COBRA premium payments for eligible individuals who lost coverage due to an involuntary termination for up to six months, which ended September 30, 2021.

Commuter Programs.

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For 2023, the maximum pre-tax monthly limits are $300 for qualified transit and $300 for qualified parking.

The Luum technology platform provides employers with various commuter services, including access to real-time commute data, to help them design and implement flexible return-to-office and hybrid-workplace strategies and benefits.

Our Luum technology platform provides employers with various commuter services, including access to real-time commute data, to help them design and implement flexible return-to-office and hybrid-workplace strategies and benefits.

Our technology

Technology solution.

Technology platforms.

We provide multiple cloud-based platforms, accessed by our members online via a desktop or mobile device, through which individuals can make health saving and spending decisions, pay healthcare bills, compare treatment options and prices, receive personalized benefit and clinical information, earn wellness incentives, grow their savings and make investment choices.

The platforms provide users with access to services we provide as well as services provided by third parties selected by us or by our Network Partners.

Our delivery model for these platforms eliminates the need for our Clients to install and maintain hardware and software in order to support HSA and other CDB programs and enables us to rapidly implement product enhancements across our entire user base.

Users of our HSA platform can pay these bills from an account of ours or from any bank account, online, via a mobile device, or using our payment card.

All users of our HSA platform gain access to our healthcare consumer specialists, available every hour of every day, via a toll-free telephone number or email.

As of January 31, 2023, we had substantially completed our efforts to phase out certain technology platforms that we acquired in the acquisition of our wholly owned subsidiary, WageWorks, Inc.

(the "WageWorks Acquisition"), and migrate the associated clients to one of our other technology platforms.

We are working to phase out a technology platform that we acquired in the Further Acquisition, which requires us to migrate the associated clients to one of our other technology platforms.

Cloud-based solution.

Our proprietary technology is deployed as a cloud-based solution that is accessible to customers online and through our mobile app.

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We are increasing investment in our technology and communications systems to support new opportunities and enhance security, privacy, and platform infrastructure.

Our solution is hosted via cloud-based services and on a virtual private cloud with an ability to scale on demand.

Our solution is delivered via cloud-based services and hosted in third-party data centers or on a virtual private cloud with an ability to scale on demand.

This allows us to quickly support our current and projected growth.

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In the event a security risk is detected, or a breach occurs, we are prepared with appropriate response protocols based on National Institute of Standards & Technology ("NIST") guidelines.

Our Security Incident Response Plan defines roles and responsibilities, incident severity levels, key contacts, post-incident steps, and guidelines for

Our Security Incident Response Plan defines roles and responsibilities, incident severity levels, key contacts, post-incident steps, and guidelines for testing.

Our procedures cover response steps for phishing attacks, ransomware, data breaches, and major vulnerabilities.

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Many of these are state or federally chartered banks and other financial institutions for which we believe benefits administration services are not a core business.

Some of our direct competitors (including healthcare service companies such as United Health Group's Optum, Webster Bank, and well-known retail investment companies, such as Fidelity Investments ) are in a position to devote more resources to the development, sale and support of their products and services than we have at our disposal.

Some of our direct competitors (including healthcare service companies such as UnitedHealth Group's Optum, Webster Bank, and well-known retail investment companies, such as Fidelity Investments ) are in a position to devote more resources to the development, sale and support of their products and services than we have at our disposal.

Our CDB administration competitors include health insurance carriers, human resources consultants and outsourcers, payroll providers, national CDB specialists, regional third-party administrators, and commercial banks.

In addition, numerous indirect competitors, including benefits administration service providers, partner with banks and other HSA custodians to compete with us.

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Our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics.

As a result of the societal and economic changes arising out of the COVID-19 pandemic, we have seen a significant decline in the use of commuter benefits due to many of our members working from home, which has negatively impacted both our interchange revenue and service revenue, and this "work from home" trend, or hybrid work environments, may continue indefinitely.

Our competitive strengths and strategy

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Our technology platforms are aligned with a healthcare environment that rewards consumer engagement and fosters an integrated consumer experience.

Market leadership.

We have established a defensible leadership position in the HSA industry through our focus on innovation and differentiated capabilities.

Our leadership position is evidenced by the increase in our market share (measured by HSA Assets), from 4% in December 2010 to 18% in December 2021, as noted by the 2021 Devenir HSA Research Report, which indicates we are the second largest HSA custodian by market share measured by HSA Assets.

Complete solution for managing consumer healthcare saving and spending.

Our members utilize our platforms in a number of ways and in varying frequencies.

For example, our members utilize our HSA platform to evaluate and pay healthcare bills through the member portal, which allows members to pay their healthcare providers, receive reimbursements and learn of savings opportunities for prescription drugs.

Members also utilize the platform’s mobile app to view and pay claims on-the-go, including uploading medical and insurance documentation to the platform with their mobile phone cameras.

Our leadership position is evidenced by the increase in our market share (measured by HSA Assets), from 4% in December 2010 to 20% in December 2022, as reported in the 2022 year-end Devenir HSA Research Report, which indicates we are the largest HSA custodian measured by both accounts and HSA Assets.

Differentiated consumer experience.

We have designed our solution and support services to deliver a differentiated consumer experience, which is a function of our culture and technology.

We believe this provides an advantage relative to legacy competitors, which we believe prioritize transaction processing and benefits administration.

We call our culture "Purple," which we define by our four Purple values — Do the Right Thing, Be Remarkable, Make a Difference, and Celebrate People.

We believe our Purple culture is a significant factor in our ability to attract and retain customers and to address opportunities in the rapidly changing healthcare sector.

• Technology:

Our technology helps us deliver on our commitment to provide Purple service.

We tailor the content of our technology platforms and the guidance of our experts to be timely, personal, and relevant to each member.

For example, our technology generates health savings strategies that are delivered to our members when they interact with our platforms or call us.

• Customer service and education:

As a key part of our strategy and commitment to provide Purple service, our team members work directly with our Network Partners, Clients, and members to engage with consumers, educating them about the benefits of our HSAs and our other products and providing personalized guidance.

We employ individuals who provide real-time assistance to our members via telephone, email, or chat.

Bundled solution for HSAs and complementary CDBs.

We are the largest custodian and administrator of HSAs (by number of accounts), as well as a market-share leader in each of the major categories of complementary CDBs, including FSAs and HRAs, COBRA and commuter benefits administration.

We are a market-share leader in each of the major categories of complementary CDBs, including FSAs and HRAs, COBRA and commuter benefits administration.

Our Clients and their benefits advisors increasingly seek HSA providers that can deliver an integrated offering of HSAs and complementary CDBs.

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We believe that the combination of HSA and complementary CDB offerings significantly strengthens our value proposition to employers, health benefits brokers and consultants, and Network Partners as a leading single-source provider.

Large and diversified channel access.

We believe our differentiated distribution platforms provide a competitive advantage by efficiently enabling us to reach a growing consumer market.

Our solution is built on a business-to-business-to-consumer, or B2B2C, channel strategy, whereby we work with Network Partners and Clients to reach consumers in addition to marketing our services to these potential members directly.

Reaching the consumer is critical in order for us to increase the number of our HSA members.

Health plan Network Partners have been, and continue to be, a key channel through which we gain access to clients and members.

The Further Acquisition expanded the number of health plan Network Partners with which we work and is providing greater access to clients and members.

We work directly with our Network Partners and Clients to reach the consumer in various ways.

Our health plan and administrator partners collectively employ thousands of sales representatives and account managers who promote both the health plan and administrator partner’s health insurance products, such as HDHPs, and our HSAs.

Our Clients collectively employ thousands of human resources professionals who are tasked with explaining the benefits of our HSAs to their employees.

Our sales and account management teams work with and train the sales representatives and account management teams of our Network Partners and the human resource professionals of our Clients on the benefits of enrolling in, contributing to, and saving and spending through our HSAs, and our Network Partners and Clients then convey these benefits to prospective members.

As a result of this collaboration,

we develop relationships with each member who enrolls in an HSA with us.

This personalized engagement with our members constitutes our B2B2C channel strategy.

Proprietary and integrated technology solution.

We have a proprietary cloud-based technology solution, developed and refined during more than a decade of operations and acquired through the WageWorks Acquisition, which we believe is differentiated in the marketplace for a number of key reasons:

We have a proprietary cloud-based technology solution, developed and refined during more than a decade of operations, which we believe is differentiated in the marketplace for a number of key reasons:

• Complete solution for managing consumer healthcare saving and spending:

Our members utilize our technology platforms in a number of ways and in varying frequencies.

Members also utilize the platform’s mobile app to view and pay claims on-the-go, including uploading medical and insurance documentation to the platform with their mobile phone cameras.

• Purpose-built technology:

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For example, a HealthEquity team member can readily configure product attributes, including integration with a partner’s chosen healthcare price transparency or wellness tools, single sign on, sales and broker support sites, branding, member communication, custom fulfillment and payment card, savings options and interest rates, fees, and mutual fund investment choices.

Differentiated consumer experience.

We have designed our solution and support services to deliver a differentiated consumer experience, which is a function of our culture and technology.

We believe this provides an advantage relative to legacy competitors whom we believe prioritize transaction processing and benefits administration.

We call our culture “DEEP Purple,” which we define as driving excellence, ethics, and process while providing remarkable service.

Our DEEP Purple culture is a significant factor in our ability to attract and retain customers and to nimbly address opportunities in the rapidly changing healthcare sector.

• Technology:

Our technology helps us to deliver on our commitment to DEEP Purple.

We tailor the content of our platforms and the guidance of our experts to be timely, personal, and relevant to each member.

For example, our technology generates health savings strategies that are delivered to our members when they interact with our platforms or call us.

We employ individuals who provide real-time assistance to our members via telephone, email, or chat.

• Customer service and education:

As a key part of our strategy and commitment to DEEP Purple, our team members work directly with our Network Partners to engage with consumers, educating them about the benefits of our HSAs and our other products and providing personalized guidance.

We believe our DEEP Purple culture drives our success.

Large and diversified channel access.

We believe our differentiated distribution platforms provide a competitive advantage by efficiently enabling us to reach a growing consumer market.

Reaching the consumer is critical in order for us to increase the number of our HSA members.

We work directly with our Network Partners and Clients to reach the consumer in various ways.

Our health plan and administrator partners collectively employ thousands of sales representatives and account managers who promote both the health plan and administrators partner’s health insurance products, such as HDHPs, and our HSAs.

Our Clients collectively employ thousands of human resources professionals who are tasked with explaining the benefits of our HSAs to their employees.

As a result of this collaboration, we develop relationships with each member who enrolls in an HSA with us.

This personalized engagement with our members constitutes our B2B2C channel strategy.

Scalable operating model.

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After initial on-boarding and a period of education, our service costs for any given customer typically decline over time.

Our opportunity to earn high-margin revenue from existing HSA members grows over time because our HSA members’ balances typically grow, increasing custodial revenue without significant incremental cost to us.

Strong customer retention rates .

Our opportunity to earn high-margin revenue from existing HSA members grows over time because as our HSA members’ balances grow, our custodial revenue is increased without equivalent incremental cost to us.

Strong retention rates .

Retention of our HSA members has been strong over time.

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We believe that our retention rates are also high due to our HSA platform’s integration with the broader healthcare system used by our HSA members and our customer engagement and focus on the consumer experience.

Selectively pursue strategic acquisitions.

Selective acquisition strategy.

We have historically acquired HSA portfolios and businesses that strengthen our business.

We expect to continue this growth strategy and regularly evaluate opportunities.

developed an internal capability to source, evaluate, and integrate acquisitions that have created value for stockholders.

We have developed an internal capability to source, evaluate, and integrate acquisitions that have created value for stockholders.

We believe the nature of our competitive landscape provides significant acquisition opportunities.

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The IRS issues guidance regarding these regulations regularly.

In addition, we are subject to conflict of interest and other prohibited transaction rules that are enforced through excise taxes under the Internal Revenue Code.

In addition, we are subject to conflict of interest and other prohibited transaction rules that are enforced through excise

taxes under the Internal Revenue Code.

Although the excise taxes are enforced by the IRS, the underlying rules are promulgated by the Department of Labor.

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Various states also have laws and regulations that impose additional restrictions on our collection, storage, and use of personally identifiable information.

Privacy regulation in particular has become a priority issue in many states, including California, which in 2018 enacted the California Consumer Privacy Act ("CCPA") broadly regulating California residents’ personal information and providing California residents with various rights to access and control

Additional privacy requirements are applicable to us as a result of the California Privacy Rights Act of 2020, which significantly modified the CCPA by expanding consumers’ rights with respect to certain sensitive personal information.

Privacy regulation in particular has become a priority issue in many states and with the Federal government.

For example, the California Privacy Rights Act ("CPRA") became effective on January 1, 2023.

The CPRA requires companies, such as ours, that process information on California residents to make new disclosures to consumers about their data collection, use, and sharing practices, and allows consumers to opt out of certain data sharing with third parties and provides a new cause of action for data breaches.

We expect further privacy requirements to be applicable to us as a result of additional recently passed, and likely upcoming, state privacy laws, which will expand consumers’ rights with respect to their personal information.

The Federal government is also considering legislative and regulatory proposals concerning data protection.

Our private-sector clients’ FSAs, HRAs, COBRA continuation insurance, and other account-based retirement plans are covered by the Employee Retirement Income Security Act of 1974, as amended, or ERISA, which governs “employee benefits plans.” Title I of ERISA does not generally apply to HSAs.

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and employers and third-party administrators that have authority or discretion over management, administration, or investment of plan assets are subject to fiduciary responsibility under ERISA.

ERISA's requirements affect our FSAs, HRAs, and COBRA administration businesses.

requirements affect our FSAs, HRAs, and COBRA administration businesses.

The Department of Labor can bring enforcement actions or assess penalties against employers, investment advisers, administrators, and other service providers for failing to comply with ERISA’s requirements.

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Human capital

HealthEquity is comprised of people dedicated to empowering consumers to connect health and wealth by delivering remarkable service.

We refer to our culture as “DEEP Purple,” which stands for Driving Excellence, Ethics and Process while providing remarkable service to our clients and members.

We believe that our DEEP Purple culture is a key differentiator that drives the success of our company through, among other things, attracting and retaining top talent.

DEEP Purple is the essence of our company, and we invest a lot of time and energy to support and maintain it.

HealthEquity is comprised of people dedicated to empowering consumers to connect health and wealth by delivering Purple service.

We believe that our culture is a key differentiator that drives the success of our company through, among other things, attracting and retaining top talent.

Our board of directors and its committees provide oversight on certain human capital matters.

The Talent, Compensation and Culture Committee of our board of directors acts on behalf of the board to review and determine executive compensation plans, policies and programs, oversee the Company’s culture and related strategies, programs and risks, and oversee the Company’s talent management, development and retention efforts and related strategies, programs, and risks, including with respect to diversity and inclusion.

As of January 31, 2022, we had 3,688 full-time team members and 27 part-time team members, including 2,297 in service delivery, 655 in technology and development, and 763 in sales and marketing, and general and administrative positions.

The Talent, Compensation and Culture Committee of our board of directors acts on behalf of the board to review and determine executive compensation plans, policies, and programs;

oversee the Company’s culture and related strategies,

programs, and risks;

and oversee the Company’s talent management, development, and retention efforts, including with respect to diversity and inclusion.

As of January 31, 2023, we had 3,170 full-time team members and 38 part-time team members.

As January 31, 2023, our team members had the following demographic characteristics:

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Diversity and inclusion

As an employer, we celebrate the diversity of our team members and strive for consistent inclusion.

We strive to make HealthEquity a place where diversity of thought, culture, orientation, identity, and experience enhance every aspect of what we do.

We recognize the value of diversity and inclusion in our business practices.

We believe that justice, equity, diversity, and inclusion ("JEDI") in the workplace are key to team members feeling they can bring their true authentic self to their work environment and that this translates to higher productivity, increased motivation and improved performance.

At the heart of our JEDI efforts is the "Created Equal program".

Led by a diverse council, Created Equal promotes JEDI initiatives and our teammate-led business resource groups, which we call "Connections" groups.

We believe that a diverse workforce is critical to our success, and we continue to focus on the hiring, retention and advancement of women and underrepresented populations.

Our recent efforts have focused on three areas:

inspiring authenticity through an inclusive and diverse culture;

identifying diverse organizations to expand our candidate pool;

and strategically partnering with our Connections groups to accelerate our JEDI efforts.

Health, Safety and Wellness

HealthEquity also seeks to ensure that team members have the working conditions they need to succeed.

The health and well-being of our team members at work are foremost among our concerns.

We encourage our team members to follow common sense safety practices and correct any unsafe condition or report it to their supervisor.

We are committed to maintaining a safe workplace free from unlawful drugs and alcohol in accordance with applicable law and free from harassment.

HealthEquity supports these measures through extensive training as well as formal grievance procedures and policies.

In response to the COVID-19 pandemic, we have prioritized the health and safety of our team members.

This includes having the majority of our team members work from home, while implementing additional safety measures for team members continuing critical on-site work.

In addition, the Company has established a conditionally based paid leave policy to support team members who have been directly impacted by COVID-19.

HealthEquity has also helped team members maintain a healthy work-life balance and juggle competing needs during the pandemic by supporting flexible work schedules.

HealthEquity has maintained a strong focus to support the holistic health of our

team members, offering a variety of recurring sessions addressing their mental, emotional, and physical health and that of their dependents.

In September 2021, the President of the United States signed an executive order, and related guidance was published that, together, require certain COVID-19 precautions for federal contractors, including mandatory COVID-19 vaccines for employees of federal contractors (subject to medical and religious exemptions) (the “Vaccine Mandate”).

While the Vaccine Mandate has been stayed by the courts, we are classified as a federal contractor due to a number of our agreements and believe we will be subject to the Vaccine Mandate if it is reinstated.

HealthEquity’s compliance with the Vaccine Mandate has and could continue to result in increased team member attrition and absenteeism.

Regardless of the Vaccine Mandate, HealthEquity has strongly encouraged all team members to work with their medical provider to get vaccinated against COVID-19.

In addition to providing practical education on the vaccine, HealthEquity has held multiple town halls for team members to ask questions and receive important information on vaccination.

Equitable Pay Philosophy and Benefits

HealthEquity is proud to be a workplace where hard work is valued and rewarded.

We are committed to pay equity, which is being implemented through our Total Rewards program.

Our pay philosophy is intended to foster a program that supports the Company’s mission, values, and culture.

We believe that our greatest asset is our people, and our Total Rewards program, which includes salary, incentive pay, equity, retirement, and health benefits, is designed to attract and retain talented team members who drive the Company’s success.

The program is intended to be fair and easy to understand so that all team members and their managers understand the goals and outcomes.

HealthEquity strives to administer the program in a manner that is applied consistently, equitably, and free of discrimination, as follows:

We embrace diversity as a powerful strength.

We recognize the power of diverse workplaces to produce innovative ideas and foster a more productive work environment.

We also know that building a culture of inclusion and belonging for all team members helps promote their financial and emotional health, and answers a nationwide demand for employers such as ourselves that value diversity, equity, and inclusion ("DE&I").

Created Equal is our DE&I initiative.

Focused on rooting DE&I in all aspects of our Purple culture, Created Equal is committed to supporting process development that will allow all team members equal opportunity.

Created Equal is run by HealthEquity team members who identify opportunities, guide solutions, and hold the Company accountable in the integration of DE&I practices.

At the heart of our Created Equal efforts is the Created Equal Council, which is a group of cross-functional team members with representation from key stakeholder teams, including People, Legal, and Talent, who serve as an advisory body and provide research, recommendations, engagement support, and policy guidance to the Company.

The council works to integrate best DE&I practices into the policies, procedures, culture, and programs at HealthEquity.

Talent acquisition

Our commitment to DE&I remains integral to us, especially as we grow.

To sustain and strengthen our values-based culture of inclusion, our Talent Partner team and others are actively engaged in uprooting bias and centering DE&I in the talent acquisition process.

This begins with preparing our Talent Partner team with the latest information on DE&I in the workplace.

Each member of the Talent Partner team has successfully completed the “Diversity, Inclusion, and Belonging for All” course from LinkedIn, as well as the Harvard Implicit Bias Test focused on race, disability, and gender.

To aid in recruiting, the Talent Partner team is focused on developing relationships with diverse organizations to network, create awareness of HealthEquity, and share job postings.

The HealthEquity Talent Partner team is currently focused on making connections with groups focused on the following:

• Race and ethnicity

• Veteran and active-duty military status

Pay equity is a crucial metric in assessing diversity and equal opportunity at HealthEquity.

We strive to provide a consistent and fair remuneration strategy for all team members through our Total Rewards package.

This package includes:

• Base salary

• Incentive/bonus pay

• Stock-based compensation

• 401(k) with company matching

• Health benefits

The Total Rewards philosophy underlying this package is intended to promote fairness and simplicity so that team members and people leaders understand the goals and the outcomes.

We strive to administer the Total Rewards package consistently, equitably, and free of discrimination as follows:

• Maintaining competitive pay by reviewing market data annually;

• Ensuring that similar jobs are paid equitably across the organization;

• Rewarding team members based on their abilities, competencies, experience, and performance levels;

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• Complying with all applicable federal, state, and local laws and requirements.

HealthEquity believes in sharing the financial success of the Company and rewarding individual performance through offering participation in a bonus plan to all non-commissioned team members.

The bonus pool is funded based on the financial performance of the Company, and team members' performance against objectives determines the individual payouts earned.

To ensure the Total Rewards program is managed in a consistent and equitable way, all positions at HealthEquity are assigned a job and an associated pay grade.

That pay grade is determined using a formal job evaluation methodology based on a job’s purpose and key accountabilities described in the job description.

These components are the same for all positions across HealthEquity, regardless of level.

We believe in approaching team member health holistically.

Our benefits philosophy is rooted in the foundational beliefs that – first – all areas of health are intertwined, and – second – that when team members are thriving in mental, emotional, physical, social, and financial health, they are in the best position to succeed personally and provide remarkable service professionally.

Accordingly, HealthEquity provides our team members a variety of comprehensive, consumer-driven healthcare medical plans offered in conjunction with generous HSA contributions from the Company, a 401(k) plan that offers Company contributions, a subsidized dental plan, voluntary vision coverage, paid maternity and parental leaves, and importantly, a holistic wellness plan that supports the continued development of our team members’ mental, physical, financial, emotional, and social health.

Team member engagement

HealthEquity also considers team member engagement an important metric of organizational health.

We also consider team member engagement an important metric of our organizational health.

We seek team member feedback, measure team member engagement, and measure our team member Net Promoter Score℠, or NPS ® , twice a year through a survey.

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Team member NPS scores can range from -100 to 100.

As of January 31, 2022, our team member NPS was 37, based on a participation rate of 89 percent.

Out of all responders, 55 percent were promoters, 27 percent were passives, and 18 percent were detractors.

As of January 31, 2023, our team member NPS was 42, an increase of five points year over year and based on a participation rate of 83 percent.

Out of all responders, 58 percent were promoters, an increase of 3% year over year, 26 percent were passives, a decrease of 1% year over year, and 16 percent were detractors, a decrease of 2% year over year.

NPS ® is a registered trademark of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

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Item 1. Business