What changed in this filing

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Item 1. Financial Statements

2025-06-03 compared with 2024-12-09 · 95 added, 160 removed, 334 unchanged (43% of the section changed)

3 unchanged sentences

Condensed consolidated balance sheets

(in thousands, except par value) October 31, 2024 January 31, 2024

(in thousands, except par value) April 30, 2025 January 31, 2025

Current assets

Cash and cash equivalents $ 287,894 $ 295,948

Accounts receivable, net of allowance for doubtful accounts of $ 2,516 and $ 3,947 as of October 31, 2024 and January 31, 2024, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 1,041 and $ 2,070 as of April 30, 2025 and January 31, 2025, respectively

116,256 118,006

Other current assets 66,371 48,564

Prepaid expenses and other current assets 68,646 63,795

Total current assets 472,796 477,749

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Stockholders’ equity

Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of October 31, 2024 and January 31, 2024, respectively

Common stock, $ 0.0001 par value, 900,000 shares authorized, 86,823 and 86,127 shares issued and outstanding as of October 31, 2024 and January 31, 2024, respectively

Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of April 30, 2025 and January 31, 2025, respectively

Common stock, $ 0.0001 par value, 900,000 shares authorized, 86,714 and 86,536 shares issued and outstanding as of April 30, 2025 and January 31, 2025, respectively

Additional paid-in capital 1,905,444 1,905,628

7 unchanged sentences

comprehensive income (unaudited)

Three months ended October 31, Nine months ended October 31,

Three months ended April 30,

(in thousands, except per share data) 2025 2024

34 unchanged sentences

Condensed consolidated statements of stockholders’ equity (unaudited)

Three months ended October 31, Nine months ended October 31,

Three months ended April 30,

(in thousands) 2025 2024

2 unchanged sentences

Beginning balance 9 9

Issuance of common stock upon exercise of stock options, and for restricted stock — — — 1

Issuance of common stock — —

Ending balance 9 9

1 unchanged sentence

Beginning balance 1,905,628 1,829,384

Issuance of common stock upon exercise of stock options, and for restricted stock 837 2,019 4,624 3,040

Issuance of common stock 955 1,930

Stock-based compensation 14,336 32,020

11 unchanged sentences

Condensed consolidated statements of cash flows (unaudited)

Nine months ended October 31,

Three months ended April 30,

(in thousands) 2025 2024

5 unchanged sentences

Amortization of debt discount and issuance costs 265 703

Loss on extinguishment of debt 1,576 1,157

Deferred taxes 1,324 ( 5,388 )

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Cash flows from financing activities:

Proceeds from long-term debt 736,875 —

Principal payments on long-term debt ( 536,875 ) ( 54,375 )

Payment of debt issuance costs ( 3,748 ) —

Repurchases of common stock ( 59,065 ) —

Proceeds from long-term debt — 50,000

Settlement of client-held funds obligation, net 1,451 ( 546 )

1 unchanged sentence

Net cash provided by (used in) financing activities ( 56,649 ) 51,771

Increase (decrease) in cash and cash equivalents ( 81,816 ) 79,795

Decrease in cash and cash equivalents ( 8,054 ) ( 152,750 )

Beginning cash and cash equivalents 295,948 403,979

4 unchanged sentences

Condensed consolidated statements of cash flows (unaudited) (continued)

Nine months ended October 31,

Three months ended April 30,

(in thousands) 2025 2024

1 unchanged sentence

Interest expense paid in cash $ 20,809 $ 18,850

Income tax payments, net 23,817 24,777

Income tax payments (refunds), net ( 46 ) 277

Supplemental disclosures of non-cash investing and financing activities:

2 unchanged sentences

Repurchases of common stock included in accrued liabilities 2,000 —

Non-cash purchase consideration related to acquisitions of HSA portfolios 20,325 —

Exercise of common stock options receivable — 42

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HealthEquity is a leader in administering health savings accounts (“HSAs”) and complementary consumer-directed benefits (“CDBs”), which empower consumers to access tax-advantaged healthcare savings while also providing corporate tax advantages for employers.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

The reclassifications relate primarily to recordkeeping and advisory fees associated with HSA investments, which were reclassified from custodial revenue to service revenue to better align the Company's financial statement presentation with the underlying drivers of the Company's revenue streams.

The Company also reclassified certain immaterial personnel-related costs from custodial costs to service costs or general and administrative costs.

The reclassifications had no impact on the Company's total revenue, income from operations, net income, cash flows, or stockholders' equity.

The following table presents the impact of the reclassifications:

Three months ended October 31, 2023 Nine months ended October 31, 2023

(in thousands) Prior presentation Reclassifications Current presentation Prior presentation Reclassifications Current presentation

Service revenue $ 107,512 $ 6,570 $ 114,082 $ 318,343 $ 18,772 $ 337,115

Custodial revenue 106,575 ( 6,570 ) 100,005 299,933 ( 18,772 ) 281,161

Interchange revenue 35,132 — 35,132 118,924 — 118,924

Total revenue 249,219 — 249,219 737,200 — 737,200

Total cost of revenue 90,811 ( 774 ) 90,037 280,036 ( 2,153 ) 277,883

Gross profit 158,408 774 159,182 457,164 2,153 459,317

Total operating expenses 127,517 774 128,291 378,352 2,153 380,505

Total other expense ( 9,804 ) — ( 9,804 ) ( 33,489 ) — ( 33,489 )

Income tax provision 6,414 — 6,414 15,975 — 15,975

Net income $ 14,673 $ — $ 14,673 $ 29,348 $ — $ 29,348

Principles of consolidation

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All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company is managed as a single operating segment that provides administration services in connection with HSAs and other CDBs, which reflects the way in which its chief operating decision maker (“CODM”), the Chief Executive Officer, reviews the Company's financial performance and makes decisions about resource allocation.

The CODM assesses the performance of the Company, monitors actual financial results against budgets, and makes resource allocation decisions with a focus on the Company’s consolidated results as presented in the condensed consolidated statements of operations and comprehensive income.

The Company’s measure of profitability is net income.

Single segment-level financial information, including total assets, significant non-cash transactions, and capital expenditures, is contained in the accompanying condensed consolidated financial statements and related notes.

The Company does not generate material international revenues.

All long-lived assets are maintained in the United States of America.

Basis of presentation

The accompanying condensed consolidated financial statements as of October 31, 2024 and for the three and nine months ended October 31, 2024 and 2023 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

The accompanying condensed consolidated financial statements as of April 30, 2025 and for the three months ended April 30, 2025 and 2024 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

In the opinion of management, the interim data includes all adjustments necessary for a fair presentation of the results for the interim periods.

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Recently issued accounting pronouncements not yet adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of other segment items, interim disclosure of a reportable segment’s profit or loss and assets, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU requires public companies with a single reportable segment to provide the segment disclosures required by Topic 280 and will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We are currently evaluating the ASU to determine its impact on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This guidance will be effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively or retrospectively.

We are currently evaluating the ASU to determine its impact on our income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses .

The ASU requires a public business entity to disclose additional information about specific expense categories in the notes to the financial statements for interim and annual reporting periods.

The ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the ASU to determine its impact on our disclosures.

This guidance is effective for annual periods beginning after December 15, 2024 and can be applied prospectively or retrospectively.

We are currently

evaluating the ASU to determine its impact on our income tax disclosures;

however, the impact is not expected to be material.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The ASU requires disaggregated information about certain income statement expense line items on an annual and interim basis.

This guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The new standard permits early adoption and can be applied prospectively or retrospectively.

We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

Net income per share

The following table sets forth the computation of basic and diluted net income per share:

Three months ended October 31, Nine months ended October 31,

Three months ended April 30,

(in thousands, except per share data) 2025 2024

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Diluted $ 0.61 $ 0.33

For the three months ended October 31, 2024 and 2023, 0.1 million and 0.6 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

For the nine months ended October 31, 2024 and 2023, 0.1 million and 1.0 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

For each of the three months ended April 30, 2025 and 2024, 0.1 million shares attributable to outstanding restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

Supplemental financial statement information

Selected condensed consolidated balance sheet and condensed consolidated statement of operations and comprehensive income components consisted of the following:

Prepaid expenses

As of October 31, 2024 and January 31, 2024, the Company had prepaid expenses of $ 42.1 million and $ 31.2 million, respectively, which are included within other current assets on the Company's condensed consolidated balance sheets.

Property and equipment

Property and equipment consisted of the following:

(in thousands) October 31, 2024 January 31, 2024

(in thousands) April 30, 2025 January 31, 2025

Leasehold improvements $ 13,966 $ 13,966

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Property and equipment, net $ 3,173 $ 3,239

Depreciation expense was $ 1.0 million and $ 3.7 million for the three and nine months ended October 31, 2024, respectively, and $ 1.8 million and $ 6.4 million for the three and nine months ended October 31, 2023, respectively.

Depreciation expense was $ 0.7 million and $ 1.4 million for the three months ended April 30, 2025 and 2024, respectively.

Contract balances

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Alternatively, when payment precedes the related services, the Company records a contract liability, or deferred revenue, until its performance obligations are satisfied.

As of October 31, 2024 and January 31, 2024, the balance of deferred revenue was $ 19.2 million and $ 6.2 million, respectively.

The balance as of October 31, 2024 relates primarily to a contract with a depository partner, which the Company assumed in conjunction with the BenefitWallet HSA portfolio acquisition, as described in Note 5—Commitments and contingencies.

The remainder of the balances as of October 31, 2024 and January 31, 2024 relates to cash received in advance for interchange and custodial revenue arrangements, other up-front fees and other commuter deferred revenue.

April 30, 2025 and January 31, 2025, the balance of deferred revenue was $ 14.4 million and $ 17.1 million, respectively.

The balances are related to cash received in advance for custodial and interchange revenue arrangements, other up-front fees and other commuter deferred revenue.

The Company expects to recognize approximately 81 % of its balance of deferred revenue as revenue over the next 12 months and the remainder thereafter.

Amounts expected to be recognized as revenue within a period of 12 months or less are classified as accrued liabilities on the Company's condensed consolidated balance sheets, with the remainder included within other long-term liabilities.

Revenue recognized during the three and nine months ended October 31, 2024 that was included in the balance of deferred revenue as of January 31, 2024 was $ 1.1 million and $ 3.9 million, respectively.

Amounts expected to be recognized as revenue within a period of 12 months or less are classified as accrued liabilities in the Company's condensed consolidated balance sheets, with the remainder included within other long-term liabilities.

Revenue recognized during the three months ended April 30, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $ 3.2 million.

The Company expects to satisfy its remaining obligations for these arrangements.

The components of operating lease costs were as follows:

Three months ended October 31, Nine months ended October 31,

Three months ended April 30,

(in thousands)

2024 2023 2024 2023

Operating lease expense $ 2,240 $ 2,367

3 unchanged sentences

Other income, net, consisted of the following:

Three months ended October 31, Nine months ended October 31,

Three months ended April 30,

(in thousands) 2025 2024

Interest income $ 2,733 $ 3,881

Other income, net 851 28 385 530

Other expense, net — ( 477 )

Total other income, net $ 2,733 $ 3,404

Interest expense

Based on the application of Accounting Standards Codification ("ASC") 470-50, Debt - Modifications and Extinguishments , the Company recorded $ 1.6 million and $ 1.2 million of loss on extinguishment of debt during the nine months ended October 31, 2024 and 2023, respectively, which is included within interest expense in the condensed consolidated statements of operations and comprehensive income.

Supplemental cash flow information

Supplemental cash flow information related to the Company's operating leases was as follows:

Nine months ended October 31,

Three months ended April 30,

(in thousands) 2025 2024

5 unchanged sentences

The gross carrying amount and associated accumulated amortization of intangible assets were as follows:

October 31, 2024

April 30, 2025

(in thousands) Gross carrying amount Accumulated amortization Net carrying amount

15 unchanged sentences

Total amortizable intangible assets $ 1,954,752 $ ( 750,094 ) $ 1,204,658

Amortization expense was $ 39.7 million and $ 119.5 million for the three and nine months ended October 31, 2024, respectively, and $ 36.0 million and $ 108.8 million for the three and nine months ended October 31, 2023, respectively.

There were no changes to the carrying value of goodwill during the nine months ended October 31, 2024.

Amortization expense was $ 38.1 million and $ 37.5 million for the three months ended April 30, 2025 and 2024, respectively.

There were no changes to the carrying value of goodwill during the three months ended April 30, 2025.

Commitments and contingencies

The Company’s principal commitments consist of long-term debt, operating lease obligations for office space and data storage facilities, processing services agreements, software subscriptions, and other contractual commitments.

In September 2023, the Company entered into an agreement to acquire the BenefitWallet HSA portfolio from Conduent Business Services, LLC ("Conduent").

The transfer closed in a series of three tranches, as presented in the following table:

Transfers to HealthEquity Applicable purchase price

(in thousands, except HSA Assets) HSAs HSA Assets

(in millions) Paid using cash on hand Paid using borrowings under the Prior Revolving Credit Facility Total purchase price

March 7, 2024 266 $ 1,071 $ 163,974 $ — $ 163,974

April 11, 2024 134 555 34,925 50,000 84,925

May 9, 2024 216 1,047 1,101 175,000 176,101

Total 616 $ 2,673 $ 200,000 $ 225,000 $ 425,000

The BenefitWallet HSA portfolio acquisition was accounted for as an asset acquisition, and related acquisition costs were capitalized as part of the cost of the asset, which is included within intangible assets, net, on the Company's condensed consolidated balance sheet.

The Company capitalized $ 27.2 million of transaction costs associated with the acquisition during the nine months ended October 31, 2024, which includes the reimbursement of $ 20.0 million of Conduent's transfer-related expenses.

In addition, in May 2024, the Company assumed a contract with a depository partner representing approximately 7 % of the total HSA Assets added through the acquisition, which provides a custodial yield that is below current market rates and expires in June 2026.

The Company recorded deferred revenue of $ 20.3 million in May 2024 as a result of the assumed contract, which will be recorded as an increase to custodial revenue over the life of the assumed contract.

On November 27, 2024, the Company agreed to pay $ 30.0 million to settle a lawsuit related to a lease termination, as described below in the section entitled "Legal matters."

There were no other material changes during the nine months ended October 31, 2024, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

The Company’s principal commitments consist of long-term debt, operating lease obligations, and other purchase obligations and contractual commitments.

There were no material changes during the three months ended April 30, 2025, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Contingencies

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Legal matters

In April 2021, WageWorks, Inc.

("WageWorks"), a wholly owned subsidiary of the Company, exercised its right to terminate a lease for office space in Mesa, Arizona that had not yet commenced, with aggregate lease payments of $ 63.1 million and a term of approximately 11 years, following the landlord's failure to fulfill its obligations under the lease agreement (the "Lease").

WageWorks' right to terminate the Lease was disputed by the landlord, Union Mesa 1, LLC (“Union Mesa”), which claimed that the Lease had commenced on December 1, 2020.

On November 5, 2021, Union Mesa notified WageWorks that it was in default of the Lease for failure to pay rent, which Union Mesa claimed was due beginning in November 2021, after 11 months of abated rent.

On November 24, 2021, Union Mesa drew $ 2.8 million, the full amount under the letter of credit that WageWorks had posted to secure its obligations under the Lease.

On December 1, 2021, WageWorks filed a lawsuit against Union Mesa in the Maricopa County Superior Court in the State of Arizona.

On January 4, 2022, WageWorks filed an amended complaint, seeking a declaratory judgment that the Lease was properly terminated and recourse against Union Mesa for breach of contract, breach of the duty of good faith and fair dealing, and conversion, including return of the funds drawn under the letter of credit.

On November 27, 2024, the parties agreed to settle the lawsuit, with Union Mesa retaining the $ 2.8 million from the letter of credit and HealthEquity and WageWorks jointly agreeing to pay an additional $ 30.0 million to Union Mesa.

The $ 30.0 million settlement amount was recorded as merger integration expense during the three months ended October 31, 2024, and is included within accrued liabilities on the Company's condensed consolidated balance sheet as of October 31, 2024.

The $ 2.8 million letter of credit was previously recorded as merger integration expense during the period in which it was drawn by Union Mesa.

As a result of a cybersecurity incident earlier this year in which a business partner's user account containing personally identifiable information was breached, the Company is subject to multiple putative class action lawsuits that have been filed in federal court in the District of Utah.

The plaintiffs allege that the Company failed to implement reasonable data security practices, which resulted in a breach and disclosure of plaintiffs' and others' personally identifiable information and protected health information.

As a result of a cybersecurity incident in fiscal 2025 in which a business partner's user account containing personally identifiable information was breached, the Company is subject to multiple legal actions, including a consolidated putative class action lawsuit in federal court in the District of Utah, an individual lawsuit filed in Florida state court, and a mass arbitration action.

The plaintiffs in these legal actions allege that the Company failed to implement reasonable data security practices, which resulted in a breach and disclosure of plaintiffs' and others' personally identifiable information and protected health information.

The plaintiffs are seeking, among other damages, unspecified monetary damages, equitable relief, costs, and attorneys' fees arising out of the incident.

On August 22, 2024, the court issued an order granting a motion to consolidate the class action lawsuits.

On October 15, 2024, a consolidated class action amended complaint was filed.

The Company intends to vigorously defend these lawsuits.

The amount of the potential loss associated with these lawsuits cannot be reasonably estimated based on currently available information.

With respect to the consolidated putative class action lawsuit, on August 22, 2024, the court issued an order granting a motion to consolidate the class action lawsuits, on October 15, 2024, a consolidated class action amended complaint was filed, and on December 13, 2024, the Company filed a motion to dismiss the class action and a motion to compel arbitration.

The Company intends to vigorously defend these legal actions.

In addition, the Company is subject to several regulatory inquiries related to the cybersecurity incident.

The amount of the potential loss associated with these lawsuits and any potential regulatory action cannot be reasonably estimated based on currently available information.

The Company and its subsidiaries are involved in various other litigation, governmental proceedings, and claims, not described above, that arise in the normal course of business.

1 unchanged sentence

As required under GAAP, the Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Except with respect to the Lease settlement, described above, no loss accrual relating to these matters was recorded because, based on currently available information, the Company does not believe that any contingent liabilities relating to these matters are probable or that the amount of any resulting loss is estimable.

However, litigation is subject to inherent uncertainties and the Company’s view of these matters may change in the future.

Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position, results of operations and cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

No loss accrual relating to these matters was recorded because, based on currently available information, the Company does not believe that any contingent liabilities relating to these matters are probable or that the amount of any resulting loss is estimable.

However, litigation is subject to inherent uncertainties and the Company’s view of these matters may change.

an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position, results of operations and cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

Long-term debt consisted of the following:

(in thousands) October 31, 2024 January 31, 2024

(in thousands) April 30, 2025 January 31, 2025

4.50 % Senior Notes due 2029

1 unchanged sentence

Revolving Credit Facility 461,875 461,875

Prior Term Loan Facility — 286,875

Principal amount 1,061,875 1,061,875

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Long-term debt, net $ 1,056,566 $ 1,056,301

(1) In addition to the $ 5.8 million and $ 11.9 million of unamortized discount and issuance costs related to long-term debt as of October 31, 2024 and January 31, 2024, respectively, $ 8.1 million and $ 2.5 million of unamortized issuance costs related to the Company's Revolving Credit Facility and Prior Revolving Credit Facility (as defined below) are included within other assets on the condensed consolidated balance sheets as of October 31, 2024 and January 31, 2024, respectively.

(1) In addition to the $ 5.3 million and $ 5.6 million of unamortized discount and issuance costs related to long-term debt as of April 30, 2025 and January 31, 2025, respectively, $ 7.2 million and $ 7.7 million of unamortized issuance costs related to the Company's Revolving Credit Facility are included within other assets on the condensed consolidated balance sheets as of April 30, 2025 and January 31, 2025, respectively.

4.50 % Senior Notes due 2029

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Interest on the Notes is payable on April 1 and October 1 of each year.

As of October 31, 2024 and January 31, 2024, the balance of accrued interest on the Notes was $ 2.3 million and $ 9.3 million, respectively, which is included within accrued liabilities on the Company's condensed consolidated balance sheets.

As of April 30, 2025 and January 31, 2025, the balance of accrued interest on the Notes was $ 2.3 million and $ 9.0 million, respectively, which is included within accrued liabilities on the Company's condensed consolidated balance sheets.

The effective interest rate on the Notes is 4.72 %.

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Credit Agreement

On August 23, 2024, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, as borrower, each lender from time to time party thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent and the Swing Line Lender (as defined in the Credit Agreement), and each L/C Issuer (as defined therein) party thereto, pursuant to which the Company established a new five-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $ 1.0 billion (with a $ 25 million sub-limit for the issuance of letters of credit).

The Company borrowed $ 511.9 million under the Revolving Credit Facility to refinance the Prior Credit Agreement (as defined below).

The Revolving Credit Facility may be used in the future for working capital and general corporate purposes, including the financing of acquisitions and other investments.

As of October 31, 2024, the outstanding balance under the Revolving Credit Facility was $ 486.9 million, which is included within long-term debt, net of issuance costs, on the condensed consolidated balance sheet.

As of April 30, 2025, the outstanding balance under the Revolving Credit Facility was $ 461.9 million, which is included within long-term debt, net of issuance costs, on the condensed consolidated balance sheet.

The maturity date of the Revolving Credit Facility is August 23, 2029.

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The Company is also required to pay certain fees to the Lenders, including, among others, a quarterly commitment fee on the average unused amount of the Revolving Credit Facility at a rate ranging from 0.25 % to 0.50 %, with the applicable rate also determined by reference to a leverage-based pricing grid set forth in the Credit Agreement.

As of October 31, 2024, the interest rate on the Revolving Credit Facility was 6.34 %.

As of April 30, 2025, the interest rate on the Revolving Credit Facility was 5.92 %.

The loans under the Revolving Credit Facility may be prepaid, and the commitments thereunder may be reduced by the Company without penalty or premium, subject to the reimbursement of customary “breakage costs.”

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, in each case, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains financial performance covenants, which require the Company to maintain (i) a maximum total net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 5.00 to

1.00 beginning with the fiscal quarter ending January 31, 2025, and (ii) a minimum consolidated interest coverage ratio, measured as of the last day of each fiscal quarter, of no less than 3.00 to 1.00 beginning with the fiscal quarter ending January 31, 2025.

The Company was in compliance with all covenants under the Credit Agreement as of October 31, 2024 and for the period then ended.

The Company was in compliance with all covenants under the Credit Agreement as of April 30, 2025 and for the period then ended.

The repayment obligation under the Credit Agreement may be accelerated upon the occurrence of an event of default thereunder, including, among other things, failure to pay principal, interest or fees on a timely basis, material inaccuracy of any representation or warranty, failure to comply with covenants, cross-default to other material debt, material judgments, change of control and certain insolvency or bankruptcy-related events, in each case, subject to any certain grace and/or cure periods.

The Company’s obligations under the Credit Agreement are required to be unconditionally guaranteed by each of its existing or subsequently acquired or organized direct and indirect domestic subsidiaries and are secured by security interests in substantially all assets of the Company and the guarantors, in each case, subject to certain customary exceptions.

Prior Credit Agreement

On October 8, 2021, the Company entered into a credit agreement (as amended, the “Prior Credit Agreement”) among the Company, as borrower, each lender from time to time party thereto (the “Prior Lenders”), JPMorgan Chase Bank, N.A., as administrative agent and the Swing Line Lender (as defined in the Prior Credit Agreement), and each L/C Issuer (as defined therein) party thereto, pursuant to which the Company established:

(i) a five-year senior secured term loan A facility (the “Prior Term Loan Facility”), in an aggregate principal amount of $ 350 million;

(ii) a five-year senior secured revolving credit facility (the “Prior Revolving Credit Facility” and, together with the Prior Term Loan Facility, the “Prior Credit Facilities”), in an aggregate principal amount of up to $ 1.0 billion (with a $ 25 million sub-limit for the issuance of letters of credit).

Prior to June 1, 2023, borrowings under the Prior Credit Facilities bore interest at an annual rate equal to, at the option of the Company, either (i) LIBOR (adjusted for reserves) plus a margin ranging from 1.25 % to 2.25 % or (ii) an alternate base rate plus a margin ranging from 0.25 % to 1.25 %, with the applicable margin determined in either scenario by reference to a leverage-based pricing grid set forth in the Prior Credit Agreement.

On June 1, 2023, the Company entered into an amendment to the Prior Credit Agreement which replaced interest rate provisions based on LIBOR with the forward-looking term rate based on Term SOFR.

As a result, borrowings under the Prior Credit Agreement as so amended bore interest at an annual rate equal to, at the option of the Company, either (i) Term SOFR, plus a 0.10 % credit spread adjustment, plus a margin ranging from 1.25 % to 2.25 %, or (ii) an alternate base rate, plus a margin ranging from 0.25 % to 1.25 %, with the applicable margin determined in either scenario by reference to a leverage-based pricing grid set forth in the Prior Credit Agreement (as amended).

The Company was also required to pay certain fees to the Prior Lenders, including, among others, a quarterly commitment fee on the average unused amount of the Prior Revolving Credit Facility at a rate ranging from 0.20 % to 0.40 %, with the applicable rate also determined by reference to a leverage-based pricing grid set forth in the Prior Credit Agreement.

The Prior Credit Agreement contained significant customary affirmative and negative covenants.

The Company was in compliance with all covenants under the Prior Credit Agreement through the date on which the Prior Credit Agreement was terminated.

On August 23, 2024, in connection with the entry into the Credit Agreement, the Company repaid all outstanding obligations in the amount of $ 511.9 million under the Prior Credit Agreement and terminated all commitments thereunder.

The Company follows ASC 740-270, Income Taxes - Interim Reporting , for the computation and presentation of its interim period tax provision.

Accordingly, management estimated the effective annual tax rate and applied this rate to pre-tax income through the end of the latest fiscal quarter to determine the interim income tax provision.

For the three and nine months ended October 31, 2024, the Company recorded an income tax provision of $ 0.5 million and $ 15.7 million, respectively.

This resulted in an effective income tax rate of 8.3 % and 18.3 % for the three and nine months ended October 31, 2024, respectively, compared with an effective income tax rate of 30.4 % and 35.2 % for

the three and nine months ended October 31, 2023, respectively.

For the three and nine months ended October 31, 2024, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense, return-to-provision adjustments on research and development tax credits, and an increase in unrecognized tax benefits.

For the three and nine months ended October 31, 2023, discrete tax items impacting the effective tax rate were primarily due to return-to-provision adjustments on research and development tax credits, an increase in unrecognized tax benefits, adjustments from settlement of an Internal Revenue Service examination, and differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense.

As of October 31, 2024 and January 31, 2024, the Company’s total gross unrecognized tax benefit was $ 24.0 million and $ 19.2 million, respectively.

If recognized, $ 20.7 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of October 31, 2024.

For the three months ended April 30, 2025 and 2024, the Company recorded an income tax provision of $ 17.0 million and $ 4.4 million, respectively.

This resulted in an effective income tax rate of 24.0 % and 13.3 % for the three months ended April 30, 2025 and 2024, respectively.

For the three months ended April 30, 2025, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense and changes to net state deferred tax liabilities due to state apportionment changes.

For the three months ended April 30, 2024, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense.

As of April 30, 2025 and January 31, 2025, the Company’s total gross unrecognized tax benefit was $ 25.5 million and $ 24.1 million, respectively.

If recognized, $ 22.1 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of April 30, 2025.

The Company files income tax returns with U.S.

federal and state taxing jurisdictions and is currently under examination by California and Texas.

These examinations may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards.

federal and state taxing jurisdictions and is currently under examination by the states of California and Texas.

Such examinations may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards.

As a result of the Company's net operating loss carryforwards and tax credit carryforwards, the Company remains subject to examination by one or more jurisdictions for tax years after 2006.

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The following table shows a summary of stock-based compensation in the Company's condensed consolidated statements of operations and comprehensive income during the periods presented:

Three months ended October 31, Nine months ended October 31,

Three months ended April 30,

(in thousands) 2025 2024

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Incentive Plan.

During the nine months ended October 31, 2024, the Company adopted the HealthEquity, Inc.

2024 Equity Incentive Plan (the "Incentive Plan"), which provides for the issuance of stock awards to team members, consultants, and directors of the Company.

Subject to adjustment as provided in the Incentive Plan, as of October 31, 2024, the aggregate number of shares of the Company’s common stock reserved and available for issuance pursuant to awards granted under the Incentive Plan was 4.1 million.

No further awards will be made under the Company’s 2014 Equity Incentive Plan.

The HealthEquity, Inc.

2024 Equity Incentive Plan (the "Incentive Plan") provides for the issuance of stock awards to team members, consultants, and directors of the Company.

Subject to adjustment as provided in the Incentive Plan, as of April 30, 2025, the aggregate number of shares of the Company’s common stock reserved and available for issuance pursuant to awards granted under the Incentive Plan was 3.1 million.

Stock options

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Exercised ( 33 ) $ 25.06 - 44.53

Outstanding as of October 31, 2024 477 $ 21.27 - 73.61

Outstanding as of April 30, 2025 336 $ 21.27 - 73.61

$ 49.91 1.3 $ 12,043

Vested and expected to vest as of October 31, 2024 477 $ 46.47 2.6 $ 18,499

Exercisable as of October 31, 2024 477 $ 46.47 2.6 $ 18,499

Vested and expected to vest as of April 30, 2025 336 $ 49.91 1.3 $ 12,043

Exercisable as of April 30, 2025 336 $ 49.91 1.3 $ 12,043

Restricted stock units

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Forfeited ( 183 ) 83.21

Outstanding as of October 31, 2024 3,053 $ 74.54

Outstanding as of April 30, 2025 2,908 $ 78.36

Performance restricted stock units.

During the nine months ended October 31, 2024, the Company awarded 182,044 PRSUs subject to a market condition based on the Company’s total shareholder return relative to the Russell 2000 index as measured on January 31, 2027.

During the three months ended April 30, 2025, the Company awarded 139,451 PRSUs subject to a market condition based on the Company’s total shareholder return relative to the Russell 3000 index as measured on January 31, 2028.

The Company used a Monte Carlo simulation to determine that the grant date fair value of the awards was $ 17.7 million.

Compensation expense is recorded over the requisite service period if the service condition is met regardless of whether the market condition is satisfied.

The market condition allows for a range of vesting from 0 % to 200 % based on the level of performance achieved.

condition allows for a range of vesting from 0 % to 200 % based on the level of performance achieved.

The PRSUs cliff vest upon approval by the Talent, Compensation and Culture Committee of the board of directors.

In addition, during the nine months ended October 31, 2024, the Company awarded 60,682 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2027.

In addition, during the three months ended April 30, 2025, the Company awarded 46,485 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2028.

The PRSUs cliff vest and are issued upon approval by the Talent, Compensation and Culture Committee.

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The vesting of the PRSUs will ultimately range from 0 % to 200 % of the number of shares underlying the PRSU grant based on the level of achievement of the performance goals.

Each of the PRSUs granted during the nine months ended October 31, 2024 contains a provision such that upon the award holder's eligible retirement, the PRSUs would remain outstanding and eligible to vest based on achievement of their respective market or performance conditions without regard to the award holder’s continued employment on the vesting date.

Each of the PRSUs granted during the three months ended April 30, 2025 contains a provision such that upon the award holder's eligible retirement, the PRSUs would remain outstanding and eligible to vest based on achievement of their respective market or performance conditions without regard to the award holder’s continued employment on the vesting date.

Based on the application of ASC 718, Compensation - Stock Compensation , expense is recognized over the requisite service period, which ends on the earlier of (1) the date of approval by the Talent, Compensation and Culture Committee or (2) the date the award holder becomes eligible for retirement (defined as at least 55 years old with least 10 years of service at the Company).

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The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and the program may be suspended or discontinued at any time.

The following table sets forth the common stock repurchased and subsequently retired during the periods presented:

Three months ended October 31, 2024 Nine months ended October 31, 2024

The following table sets forth the common stock repurchased and subsequently retired during the three months ended April 30, 2025:

Three months ended April 30, 2025

(in thousands)

Shares Amount Shares Amount

Shares Amount

Common stock repurchases (1) 702 $ 60,311

(1) Shares repurchased include unsettled repurchases as of October 31, 2024.

(1) Shares repurchased include unsettled repurchases as of April 30, 2025.

All repurchases were made in open market transactions.

The excess of repurchase price over par value was allocated between additional paid-in capital and retained earnings.

As of October 31, 2024, $ 240.0 million of common stock remained authorized for repurchase under the Company's stock repurchase program.

As of April 30, 2025, $ 117.5 million of common stock remained authorized for repurchase under the Company's stock repurchase program.

Fair value measurements are made at a specific point in time based on relevant market information.

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The Notes are valued based upon quoted market prices and are considered Level 2 instruments because the markets in which the Notes trade are not considered active markets.

As of October 31, 2024, the fair value of the Notes was $ 571.0 million.

Borrowings under the Revolving Credit Facility are considered Level 2 instruments and recorded at book value in the Company's condensed consolidated financial statements.

As of April 30, 2025, the fair value of the Notes was $ 568.1 million.

The Revolving Credit Facility is considered a Level 2 instrument, and the amounts outstanding thereunder are recorded at book value in the Company's condensed consolidated financial statements.

The Revolving Credit Facility reprices frequently due to variable interest rate terms and entails no significant changes in credit risk.

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Subsequent events

As described in Note 5—Commitments and contingencies, on November 27, 2024, the Company agreed to settle a lawsuit related to the termination of an office lease and agreed to pay $ 30.0 million as part of the settlement.

In May 2025, the Company executed bond forward transactions with a combined notional value of $ 500 million and settlement dates between January 2026 and January 2027 to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by our depository partners into group annuity contracts or similar arrangements with our insurance company partners.

These derivatives are designated as cash flow hedges.

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-Q

Item 1. Financial Statements