What changed in this filing

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Item 1. Business

2025-03-18 compared with 2024-03-22 · 42 added, 83 removed, 292 unchanged (30% of the section changed)

11 unchanged sentences

We have increased our share of the growing HSA market from 4% in December 2010 to 21% as of June 2024, measured by HSA Assets.

According to Devenir, as of June 2023, we were the largest HSA provider by both accounts and HSA Assets.

According to the 2024 Midyear Devenir HSA Research Report, as of June 2024, we were the largest HSA provider by both accounts and HSA Assets.

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

11 unchanged sentences

Recent acquisitions

Luum acquisition.

In March 2021, we bolstered our commuter offering by acquiring 100% of the outstanding capital stock of Fort Effect Corp, d/b/a Luum (the "Luum Acquisition").

The aggregate purchase price for the acquisition consisted of $56.2 million in cash.

Luum 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.

Fifth Third Bank HSA portfolio acquisition.

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.

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.

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BenefitWallet HSA portfolio acquisition.

In September 2023, we entered into an agreement to acquire the BenefitWallet HSA portfolio from Conduent Business Services, LLC, for a purchase price of $425.0 million and reimbursement of up to $20.0 million of Conduent's transfer-related expenses.

In addition, we expect to incur approximately $7.0 million of transaction costs associated with the acquisition.

The agreement contemplates a transfer of approximately 665,000 customer accounts and their approximately $2.8 billion of HSA Assets and includes a mechanism to adjust the purchase price based on the amount of HSA Assets actually transferred.

The transfer is expected to close in multiple tranches during the first half of fiscal 2025, subject to the satisfaction of certain customary closing conditions.

We expect to pay approximately 50% of the purchase price and associated costs using cash on hand, with the remainder paid using our revolving credit facility with the actual percentages to be determined in connection with the payment for each tranche.

On March 7, 2024, the first of the three HSA Asset transfers occurred, with approximately 266,000 HSAs and $1.1 billion of HSA Assets transferring to HealthEquity’s custody.

In connection with this transfer, HealthEquity paid the applicable purchase price of $163.9 million using cash on hand.

In fiscal 2025, we acquired the BenefitWallet HSA portfolio, comprised of approximately 616,000 HSAs plus other accounts and $2.7 billion of HSA Assets, from Conduent Business Services, LLC ("Conduent") for a purchase price of $425.0 million.

We paid the purchase price using $225.0 million of borrowings under our revolving credit facility, with the remainder paid using cash on hand.

Our products and services

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For members who do not subscribe for Advisor, we provide an investment platform to invest HSA balances.

Neither we nor Advisor provides advice to members in respect of investments among funds on the platform;

Neither we nor Advisor provides advice to members in respect of investments on the platform;

• GPS powered by HealthEquity Advisors, LLC:

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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”).

This relationship provides eligible federal government employees access to our advanced technology platforms and premium service capabilities.

Health reimbursement arrangements.

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Commuter programs.

We administer pre-tax commuter benefit programs.

Employers are permitted to provide employees with commuter benefits including qualified transit (which includes vanpooling) and parking.

We administer pre-tax commuter benefit programs through which employers are permitted to provide employees with commuter benefits including qualified transit and parking.

The maximum monthly federal (and sometimes state) tax free exclusion is indexed for inflation.

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.

We also offer various other commuter services, including access to real-time commute data, to help employers design and implement flexible return-to-office and hybrid-workplace strategies and benefits.

Our competitive landscape

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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 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.

Some of our direct competitors (including well-known retail investment companies, such as Fidelity Investments, and healthcare service companies such as UnitedHealth Group's Optum and Webster Bank ) 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.

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We have established a 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 20% in June 2023, as reported in the June 2023 Devenir HSA Research Report, which indicates we are the largest HSA custodian measured by both accounts and HSA Assets.

Our leadership position is evidenced by the increase in our market share (measured by HSA Assets), from 4% in December 2010 to 21% in June 2024, as reported in the 2024 Midyear Devenir HSA Research Report, which stated that we are the largest HSA custodian measured by both accounts and HSA Assets.

Differentiated consumer experience.

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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.

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.

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We have a proprietary cloud-based technology solution, which we believe is differentiated in the marketplace for the key reasons described below.

We are currently investing in a significant modernization of our proprietary technology platforms to support new opportunities and enhance security, privacy and platform infrastructure, while maintaining existing applications, features, and services.

We are currently investing in a modernization of our proprietary technology platforms to support new opportunities and enhance security, privacy and platform infrastructure, while maintaining existing applications, features, and services.

• Complete solution for managing consumer healthcare saving and spending:

1 unchanged sentence

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.

Members also utilize the platform’s mobile app, which has been re-launched to drive better outcomes, 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:

1 unchanged sentence

We believe our technology enables us to both provide remarkable experiences and drive member outcomes by providing greater functionality and flexibility than the technologies used by our competitors, many of which were originally developed for banking, benefits administration or retirement services.

We believe we are one of few providers with a solution that encompasses all of the core functionality of healthcare saving and spending in one integrated, secure, and compliant system, including custodial administration of individual savings and investment accounts, card and electronic funds transaction processing, benefits enrollment and eligibility, electronic and paper medical claims processing, medical bill presentment, tax-advantaged reimbursement account and health incentive administration, HSA trust administration, online investment advice, and sophisticated analytics.

and health incentive administration, HSA trust administration, online investment advice, and sophisticated analytics.

• Data integration:

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A key part of our strategy is to integrate into our partners' ecosystems, rather than requiring them to conform to ours, as many of our partners’ systems rely on custom data models, non-standard formats, complex business rules, and security protocols that are difficult or expensive to change.

We believe that this integration will enable us to deepen our partnerships with our Network Partners and other ecosystem partners.

We believe that this integration enables us to deepen our partnerships with our Network Partners and other ecosystem partners.

• Configurability:

3 unchanged sentences

We continue to invest in technology solutions to meet the evolving needs of our Network Partners, Clients and members.

Our current innovation efforts include, among others, increasing member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through artificial intelligence ("AI") tools, leveraging stacked cards, and mobile wallet.

Scalable operating model.

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Enhanced Rates is our default HSA cash offering, and a significant portion of new HSA cash is placed in Enhanced Rates.

An increase in the percentage of HSA cash held in our Enhanced Rates offering positively impacts our custodial

revenue, as we generally receive a higher yield on HSA cash held by our insurance company partners compared to cash held by our Depository Partners.

In addition, increased participation in our Enhances Rates offering reduces our exposure to short-term fluctuations in prevailing interest rates because contract repricing occurs gradually, at approximately 10% per year.

An increase in the percentage of HSA cash held in our Enhanced Rates offering positively impacts our custodial revenue, as we generally receive a higher yield on HSA cash held by our insurance company partners compared to cash held by our Depository Partners.

In addition, increased participation in our Enhanced Rates offering reduces our exposure to short-term fluctuations in prevailing interest rates because contract repricing occurs gradually, at approximately 10% per year.

The percentage of HSA cash held in our Enhanced Rates offering has increased, and we expect that it will continue to increase.

Beginning in the fiscal year ending January 31, 2025, as our Basic Rates contracts expire, the HSA cash held in those Basic Rates contracts will transition to Enhanced Rates contracts, subject to our members retaining the right to keep their HSA cash in Basic Rates.

As our Basic Rates contracts expire, the HSA cash held in those Basic Rates contracts will transition to Enhanced Rates contracts, subject to our members retaining the right to keep their HSA cash in Basic Rates.

Strong retention rates.

4 unchanged sentences

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

We expect to continue this growth strategy, including through the BenefitWallet HSA portfolio acquisition, and are regularly engaged in evaluating different opportunities.

We expect to continue this growth strategy and are regularly engaged in evaluating different opportunities.

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

6 unchanged sentences

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.

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.

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.

3 unchanged sentences

Our commuter platform 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 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.

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

For a description of our cybersecurity risk management framework for our technology platforms, see Item 1C.

30 unchanged sentences

Nonpublic personal information includes information that is collected or generated in the course of offering a financial product or service.

For example, nonpublic personal information includes information submitted by a prospective account holder in an application, an account holder’s name and contact information, and transaction information.

Because part of our business is the administration of financial products such as HSAs, we are required under the Consumer Financial Protection Bureau’s financial privacy rule under GLBA to send a notice of our privacy practices to account holders and to comply with restrictions on the disclosure of nonpublic personal information to non-affiliated third parties.

example, nonpublic personal information includes information submitted by a prospective account holder in an application, an account holder’s name and contact information, and transaction information.

Because part of our business is the administration of financial products such as HSAs, we are required under GLBA to send a notice of our privacy practices to account holders and to comply with restrictions on the disclosure of nonpublic personal information to non-affiliated third parties.

We are also required under GLBA to establish reasonable administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of nonpublic personal information pursuant to the Federal Trade Commission’s safeguards rule.

15 unchanged sentences

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

Several of these

laws do not apply to entities or data subject to GLBA.

Several of these laws do not apply to entities or data subject to GLBA or HIPAA.

The federal government is also considering legislative and regulatory proposals concerning privacy, data protection, and cybersecurity, which may require us to implement and maintain additional operational or compliance measures.

16 unchanged sentences

Further changes to the Affordable Care Act and related healthcare regulation remain under consideration, including "Medicare for all" plans.

In addition, legislative proposals to either increase access to HSAs and similar accounts, and conversely legislation that would curtail them, are commonly introduced in both chambers of Congress and could be taken up at any time.

Investment Advisers Act of 1940

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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.

and oversee the Company’s talent management, development, and retention efforts.

As of January 31, 2025, we had 3,105 full-time team members and 15 part-time team members.

As of January 31, 2024, our team members had the following demographic characteristics:

Leadership Team (1) All Other

People Leaders All Other HealthEquity

Team Members (2)

Women 31 % 59 % 66 %

Men 69 % 41 % 33 %

Under age 30 0 % 3 % 12 %

Between ages 30 and 50 60 % 67 % 60 %

Over age 50 40 % 30 % 28 %

People of color 18 % 26 % 37 %

(1) Our executive leadership team includes people in VP-level positions and above.

(2) Gender was not specified by 1% of team members included in this column.

Diversity, equity, and inclusion ("DE&I")

To reach our goals, we seek to create an environment that attracts, sustains, and fulfills our team members.

That starts with building and maintaining a diverse, equitable, and inclusive culture.

At HealthEquity, we embrace diversity as a strength.

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

The Created Equal Council, our DE&I initiative, is comprised of HealthEquity team members who identify opportunities, guide solutions, and hold the Company accountable in the integration of DE&I practices.

The Council is charged with researching, developing, and proposing mechanisms that will help create a supportive, positive, and inclusive work environment for all team members.

The Council has representatives from key stakeholder teams, including People and Legal.

Talent acquisition and team member development

Our People team seeks to attract, hire, and develop qualified candidates and team members.

Our People team seeks to attract, hire, and develop the best, most qualified candidates and team members.

HealthEquity has taken, and continues to take, steps to strengthen our talent:

• To improve the candidate experience and increase our focus on inclusive hiring practices, we created hiring committees within each department.

These hiring committees have been trained on, and employ, a competency-based structured interviewing framework.

• HealthEquity maintains its focus on DE&I across all departments and hierarchies by signing the Parity Pledge.

We committed to interviewing a diverse candidate for every Director-level position and above.

• We developed a Talent Partnership Program with our Employee Resource Groups (ERGs).

Started in 2023, each ERG has a dedicated Talent partner who is responsible for sharing talent acquisition news and opportunities.

Our People team uses a hiring framework which seeks to improve candidate experience, ensure quality of hire, and increase our focus on hiring practices that meet or exceed industry and legal standards.

• We continued an early career internship program, offering positions across two key areas:

corporate business functions and technology.

To foster diversity and inclusion, we established partnerships with prominent schools classified as Historically Black Colleges and Universities (HBCUs) and Hispanic Serving Institutions (HSIs) in regions where our presence is strongest.

• We built a library of resources for our “Grow Your Career” series with the Talent Partner and Talent Operations teams.

We strive to attract candidates aligned with our vision and who will provide the unique viewpoints and experiences that help drive our success going forward, including by our engaging in outreach with universities where we have a strong regional presence.

• We offer a library of resources for our “Grow Your Career” series with the Talent Partner and Talent Operations teams.

This includes guides on how to write resumes, create a social media presence, and prepare for interviews to support team member development.

• We run the Temporary On-Project Specialist (TOPS) program, which allows Member Service Specialists to experience working in other areas of the business.

Selected individuals are able to support areas that need help while gaining experience that can assist with their personal and professional goals.

• We are implementing a leadership development program to improve team member engagement and productivity.

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

The program is open to all Member Service Specialists, and selected individuals who are able to support areas that need help while gaining experience that can assist with their personal and professional goals.

• We are implementing a broad leadership development program to improve team member engagement and productivity.

• We coordinate an annual company-wide learning series, Remarkable You.

Open to all teammates, sessions include leadership development, emotional intelligence, technical skills, and other professional development topics.

• We also offer DEAL (Dedicated, Engaged, Authentic Leaders), an annual summit for all company leadership that provides an opportunity to discuss strategic priorities and initiatives and focus on leadership development and effective leadership workshops.

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

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

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• 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:

The Total Rewards philosophy underlying this package is intended to promote fairness and simplicity so that team members and people leaders understand the performance goals they target during the year and the outcomes that result from achieving or exceeding those goals.

We strive to administer the Total Rewards package consistently and to ensure equal opportunity as follows:

• Maintaining competitive pay by reviewing market data annually

4 unchanged sentences

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

We regularly seek team member feedback and measure engagement, previously through the Net Promoter Score℠, or NPS ® , survey, which was performed twice a year.

As our Company continues to mature, we have shifted to measuring team member engagement three times per year through a survey which contains three engagement key performance indicators (KPIs) that we believe provide a comprehensive measure of team member engagement.

We regularly seek team member feedback and measure engagement through a survey which contains three engagement key performance indicators (KPIs) that we believe provide a comprehensive measure of team member engagement.

The KPIs are designed to determine whether our team members recommend HealthEquity as a great place to work, whether their work gives them a sense of accomplishment, and whether they are motivated to go above and beyond in their work.

1 unchanged sentence

We believe that our team member engagement impacts our ability to retain our team members.

For the year ended January 31, 2024, our total team member turnover was 14.4% and our voluntary turnover was 8.4%.

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

Net Promoter Score℠ is a service mark of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

For the fiscal year ended January 31, 2025, our total team member turnover was 14% and our voluntary turnover was 8%.

Corporate information

9 unchanged sentences

Information on our website is not incorporated into this report.

Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, on our investor relations website as soon as reasonably practicable after we file such material electronically with or furnish it to the

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

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.

What changed 10-K

Item 1. Business