What changed in this filing

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Item 1. Financial Statements

2025-09-02 compared with 2025-06-03 · 145 added, 79 removed, 350 unchanged (39% of the section changed)

3 unchanged sentences

Condensed consolidated balance sheets

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

(in thousands, except par value) July 31, 2025 January 31, 2025

Current assets

Cash and cash equivalents $ 304,461 $ 295,948

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

Accounts receivable, net of allowance for doubtful accounts of $ 920 and $ 2,070 as of July 31, 2025 and January 31, 2025, respectively

111,164 118,006

23 unchanged sentences

Stockholders’ equity

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

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

Common stock, $ 0.0001 par value, 900,000 shares authorized, 86,421 and 86,536 shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively

Additional paid-in capital 1,919,312 1,905,628

Accumulated other comprehensive income 203 —

Accumulated earnings 226,897 209,274

4 unchanged sentences

and subsidiaries

Condensed consolidated statements of operations and

comprehensive income (unaudited)

Three months ended April 30,

Condensed consolidated statements of operations (unaudited)

Three months ended July 31, Six months ended July 31,

(in thousands, except per share data) 2025 2024 2025 2024

23 unchanged sentences

Income tax provision 18,194 10,794 35,232 15,220

Net income and comprehensive income $ 53,915 $ 28,813

Net income $ 59,854 $ 35,822 $ 113,769 $ 64,635

Net income per share:

7 unchanged sentences

and subsidiaries

Condensed consolidated statements of comprehensive income (unaudited)

Three months ended July 31, Six months ended July 31,

(in thousands, except per share data) 2025 2024 2025 2024

Net income $ 59,854 $ 35,822 $ 113,769 $ 64,635

Other comprehensive income

Cash flow hedges

Net unrealized gains, net of income tax expense of $ 70 for each of the three and six months ended July 31, 2025

Total other comprehensive income 203 — 203 —

Comprehensive income $ 60,057 $ 35,822 $ 113,972 $ 64,635

See accompanying notes to condensed consolidated financial statements.

HealthEquity, Inc.

and subsidiaries

Condensed consolidated statements of stockholders’ equity (unaudited)

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands) 2025 2024 2025 2024

10 unchanged sentences

Ending balance 1,919,312 1,886,765 1,919,312 1,886,765

Accumulated other comprehensive income:

Beginning balance — — — —

Other comprehensive income 203 — 203 —

Ending balance 203 — 203 —

Accumulated earnings:

8 unchanged sentences

Condensed consolidated statements of cash flows (unaudited)

Three months ended April 30,

Six months ended July 31,

(in thousands) 2025 2024

8 unchanged sentences

Accounts receivable, net 6,842 ( 3,561 )

Other assets ( 5,702 ) ( 227 )

Prepaid expenses and other current and non-current assets ( 20,650 ) ( 9,345 )

Operating lease right-of-use assets 3,339 3,365

10 unchanged sentences

Cash flows from financing activities:

Principal payments on long-term debt ( 50,000 ) —

Repurchases of common stock ( 125,810 ) —

3 unchanged sentences

Net cash provided by (used in) financing activities ( 164,768 ) 228,388

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

Increase (decrease) in cash and cash equivalents 8,513 ( 77,086 )

Beginning cash and cash equivalents 295,948 403,979

4 unchanged sentences

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

Three months ended April 30,

Six months ended July 31,

(in thousands) 2025 2024

1 unchanged sentence

Interest expense paid in cash $ 28,362 $ 26,970

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

Income tax payments, net 6,507 13,471

Supplemental disclosures of non-cash investing and financing activities:

2 unchanged sentences

Repurchases of common stock included in accrued liabilities 1,246 —

Exercise of common stock options receivable — 42

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

See accompanying notes to condensed consolidated financial statements.

10 unchanged sentences

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.

3 unchanged sentences

Basis of presentation

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.

The accompanying condensed consolidated financial statements as of July 31, 2025 and for the three and six months ended July 31, 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.

3 unchanged sentences

Significant accounting policies

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Derivative Financial Instruments and Hedging Activities

As required by Accounting Standards Codification ("ASC") 815, Derivatives and Hedging (ASC 815) , the Company records derivative financial instruments at fair value as of each reporting date.

Each of the Company's derivatives is designated as a cash flow hedge and presented on a gross basis within assets or liabilities in the Company's condensed consolidated balance sheets.

The change in fair value of the derivatives is recorded to accumulated other comprehensive income ("AOCI") in the Company's condensed consolidated balance sheets and reclassified to custodial revenue in the period the hedged transactions affect earnings.

Cash flows from hedging activities are classified as cash flows from investing activities in the condensed consolidated statements of cash flows.

The Company assesses each derivative, both at inception and on an ongoing basis, to determine if the requirements for applying hedge accounting are met.

The Company does not use derivative financial instruments for trading purposes.

See Note 10—Derivative financial instruments and hedging activities for further information.

There have been no other material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Recently adopted accounting pronouncements

4 unchanged sentences

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;

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

however, the impact is not expected to be material.

7 unchanged sentences

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

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands, except per share data) 2025 2024 2025 2024

10 unchanged sentences

Diluted $ 0.68 $ 0.40 $ 1.29 $ 0.73

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.

For the three months ended July 31, 2025 and 2024, 0.2 million and 0.1 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 six months ended July 31, 2025 and 2024, 0.1 million shares 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.

Supplemental financial statement information

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

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

Property and equipment

Property and equipment consisted of the following:

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

(in thousands) July 31, 2025 January 31, 2025

Leasehold improvements $ 14,032 $ 13,966

4 unchanged sentences

Property and equipment, net $ 3,088 $ 3,239

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

Depreciation expense was $ 0.5 million and $ 1.1 million for the three and six months ended July 31, 2025, respectively, and $ 1.3 million and $ 2.7 million for the three and six months ended July 31, 2024, respectively.

Contract balances

2 unchanged sentences

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

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

As of July 31, 2025 and January 31, 2025, the balance of deferred revenue was $ 11.5 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.

1 unchanged sentence

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.

Revenue recognized during the three and six months ended July 31, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $ 3.3 million and $ 6.4 million, respectively.

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

The components of operating lease costs were as follows:

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands)

2025 2024 2025 2024

Operating lease expense $ 2,234 $ 2,257 $ 4,474 $ 4,624

3 unchanged sentences

Other income, net, consisted of the following:

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands) 2025 2024 2025 2024

Interest income $ 3,364 $ 3,103 $ 6,097 $ 6,984

Other expense, net — ( 477 )

Other income (expense), net 27 11 27 ( 466 )

Total other income, net $ 3,391 $ 3,114 $ 6,124 $ 6,518

1 unchanged sentence

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

Three months ended April 30,

Six months ended July 31,

(in thousands) 2025 2024

5 unchanged sentences

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

April 30, 2025

July 31, 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 $ 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.

Amortization expense was $ 38.0 million and $ 76.1 million for the three and six months ended July 31, 2025, respectively, and $ 42.3 million and $ 79.9 million for the three and six months ended July 31, 2024, respectively.

There were no changes to the carrying value of goodwill during the six months ended July 31, 2025.

Commitments and contingencies

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.

There were no material changes during the six months ended July 31, 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

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications.

The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made.

The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have

not yet been made.

The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Legal matters

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.

The Company intends to vigorously defend these legal actions.

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, on December 13, 2024, the Company filed a motion to dismiss the class action and a motion to compel arbitration, and on May 5, 2025, the court dismissed without prejudice the Company's motion to compel arbitration and the motion to dismiss, with the court noting that the Company could refile both motions after the conclusion of discovery.

The Company intends to vigorously defend these remaining legal actions.

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

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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.

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.

Long-term debt consisted of the following:

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

(in thousands) July 31, 2025 January 31, 2025

4.50 % Senior Notes due 2029

6 unchanged sentences

Long-term debt, net $ 1,006,834 $ 1,056,301

(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.

(1) In addition to the $ 5.0 million and $ 5.6 million of unamortized discount and issuance costs related to long-term debt as of July 31, 2025 and January 31, 2025, respectively, $ 6.8 million and $ 7.7 million of unamortized issuance costs related to the Company's Revolving Credit Facility are included within other assets in the condensed consolidated balance sheets as of July 31, 2025 and January 31, 2025, respectively.

4.50 % Senior Notes due 2029

3 unchanged sentences

The Notes will mature on October 1, 2029.

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

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.

Interest on the Notes is payable on April 1 and October 1

of each year.

Accrued interest on the Notes was $ 9.0 million at each of July 31, 2025 and January 31, 2025, which is included within accrued liabilities on the Company's condensed consolidated balance sheets.

The effective interest rate on the Notes is 4.72 %.

8 unchanged sentences

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 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.

As of July 31, 2025, the outstanding balance under the Revolving Credit Facility was $ 411.9 million, which is included within long-term debt, net of issuance costs, in the condensed consolidated balance sheet.

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

2 unchanged sentences

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

As of July 31, 2025, the interest rate on the Revolving Credit Facility was 5.96 %.

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 ended 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 ended January 31, 2025.

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

The Company was in compliance with all covenants under the Credit Agreement as of July 31, 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.

2 unchanged sentences

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 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.

For the three and six months ended July 31, 2025, the Company recorded an income tax provision of $ 18.2 million and $ 35.2 million, respectively.

This resulted in an effective income tax rate of 23.3 % and 23.6 % for the three and six months ended July 31, 2025, respectively, compared with an effective income tax rate of 23.2 % and 19.1 % for the three and six months ended July 31, 2024, respectively.

For the three and six months ended July 31, 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 and six months ended July 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.

As of July 31, 2025 and January 31, 2025, the Company’s total gross unrecognized tax benefit was $ 26.1 million and $ 24.1 million, respectively.

If recognized, $ 22.7 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of July 31, 2025.

The Company files income tax returns with U.S.

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

federal and state taxing jurisdictions and is currently under examination by the states of California, New York, 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.

On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act” (“OBBBA”), which contains several corporate tax provisions.

The most significant provision for the Company is the immediate expensing of domestic research and experimental expenditures.

Other OBBBA changes include bonus depreciation allowance on qualified business asset purchases and modifications to the business interest expense limitation calculation.

Each of these changes may result in accelerated tax deductions during the current and future tax years.

Tax payments for the fiscal years ending January 31, 2026 and January 31, 2027 are expected to be significantly reduced as a result of the accelerated tax deductions.

However, the Company's total income tax expense and effective tax rate are not expected to materially change as a result of the new legislation.

Stock-based compensation

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 April 30,

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

Three months ended July 31, Six months ended July 31,

(in thousands) 2025 2024 2025 2024

8 unchanged sentences

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.

Subject to adjustment as provided in the Incentive Plan, as of July 31, 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 3.0 million.

Stock options

9 unchanged sentences

Exercised ( 204 ) $ 24.36 - 73.61

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

Outstanding as of July 31, 2025 165 $ 21.27 - 73.61

$ 44.25 1.9 $ 8,709

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

Vested and expected to vest as of July 31, 2025 165 $ 44.25 1.9 $ 8,709

Exercisable as of July 31, 2025 165 $ 44.25 1.9 $ 8,709

Restricted stock units

6 unchanged sentences

Forfeited ( 370 ) 77.93

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

Outstanding as of July 31, 2025 2,603 $ 80.19

Performance restricted stock units.

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.

During the six months ended July 31, 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.

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

The market 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 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.

In addition, during the six months ended July 31, 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 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).

Each of the PRSUs granted during the six months ended July 31, 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.

As a result, the expense associated with PRSUs granted to retirement-eligible individuals was recorded on the grant date.

Stockholders' equity

Stock repurchase program

In September 2024, the Company announced that its Board of Directors authorized a common stock repurchase program.

Under the program, the Company may purchase up to $ 300.0 million of its common stock, as market conditions warrant.

Stock repurchase programs

In June 2025, the Company announced that its board of directors authorized a new common stock repurchase program (the “2025 Stock Repurchase Program"), supplementing the $ 300 million common stock repurchase program approved in August 2024 (the “2024 Stock Repurchase Program").

Under the 2025 Stock Repurchase Program, the Company may purchase up to an additional $ 300 million of its common stock, as market conditions warrant.

The 2025 Stock Repurchase Program will allow the Company to continue to opportunistically repurchase shares after the 2024 Stock Repurchase Program has been exhausted.

The common stock may be repurchased at prices that the Company deems appropriate and subject to market conditions, applicable law, and other factors deemed relevant in the Company's sole discretion.

Such repurchases may be effected through open market purchases, privately negotiated transactions or otherwise, including repurchase plans that satisfy the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934.

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 three months ended April 30, 2025:

Three months ended April 30, 2025

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

The following table sets forth the common stock repurchased and subsequently retired during the three and six months ended July 31, 2025:

Three months ended July 31, 2025 Six months ended July 31, 2025

(in thousands)

Shares Amount

Shares Amount Shares Amount

Common stock repurchases (1) 665 $ 65,991 1,367 $ 126,302

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

(1) Shares repurchased include unsettled repurchases as of July 31, 2025.

Transaction fees and excise tax were recorded as part of the repurchase price.

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

As of July 31, 2025, $ 351.8 million of common stock remained authorized for repurchase under the Company's common stock repurchase programs.

Accumulated other comprehensive income

As of July 31, 2025, AOCI consisted of unrealized gains on cash flow hedges, net.

Derivative financial instruments and hedging activities

Yields paid by the Company's depository partners and insurance company partners are impacted by the prevailing interest rate environment at the time HSA cash is placed with those partners.

The Company uses Treasury bond forwards to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by its depository partners into group annuity contracts or similar arrangements with its insurance company partners.

These derivatives involve the Company and its counterparty agreeing to fix the price of a specified Treasury bond on a future date, ranging from January 2026 to January 2027, resulting in cash settlement for the difference between the fixed price and the market price on that date.

The parties may elect net settlement of multiple transactions under certain conditions;

however, the Company presents its derivative assets and liabilities on a gross basis on its condensed consolidated balance sheets.

The gain or loss on the derivative is recorded in AOCI and subsequently reclassified into custodial revenue in the same periods during which the hedged transaction affects custodial revenue earned from the Company's insurance company partners.

As of July 31, 2025, each of the Company's derivatives was designated as a cash flow hedge.

The Company did not use derivatives prior to fiscal 2026.

As of the July 31, 2025, the weighted average interest rate indicated by the Company's Treasury bond forwards was 4.05 %.

Notional amount of derivative contracts

The notional amount of the Company's derivative instruments was as follows:

(in thousands, except

number of instruments) July 31, 2025 January 31, 2025

Number of instruments Notional Number of instruments Notional

Treasury bond forwards 10 $ 1,250,000 — $ —

Fair value of derivative contracts

The table below presents the fair value of the Company’s derivatives as well as their classification in the condensed consolidated balance sheet.

July 31, 2025

Derivative assets Derivative liabilities

(in thousands) Other current assets Other assets Accrued liabilities Other long-term liabilities

Treasury bond forwards $ 1,114 $ 1,081 $ ( 1,120 ) $ ( 802 )

Effect of derivatives on the condensed consolidated financial statements

The pre-tax gains on the Company's cash flow hedges recognized in AOCI were as follows:

Three months ended July 31, Six months ended July 31,

(in thousands) 2025 2024 2025 2024

Treasury bond forwards $ 273 $ — $ 273 $ —

No reclassification from AOCI to earnings was recorded with respect to the Company's derivatives during the six months ended July 31, 2025 or 2024.

The estimated net amount of existing gains reported in AOCI as of July 31, 2025 that is expected to be reclassified into earnings within the next 12 months is immaterial.

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

9 unchanged sentences

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

As of July 31, 2025, the fair value of the Notes was $ 578.9 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.

1 unchanged sentence

As a result, the fair value of the Revolving Credit Facility approximates carrying value.

Subsequent events

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.

The Company classifies derivative instruments as Level 2 within the fair value hierarchy.

These instruments are valued using industry standard valuation models that use observable inputs such as interest rate curves and implied volatilities.

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