HEALTHEQUITY, INC. 10-Q

Item 1. Financial statements HealthEquity, Inc. and subsidiaries Condensed consolidated balance sheets (in thousands, except par value) October 31, 2025 January 31, 2025 (unaudited) Assets Current assets Cash and cash equivalents $ 309,259 $ 295,948 Accounts receivable, net of allowance for doubtful accounts of $ 918 and $ 2,070 as of October 31, 2025 and January 31, 2025, respectively 111,243 118,006 Prepaid expenses and other current assets 78,206 63,795 Total current assets 498,708 477,749 Property and equipment, net 3,390 3,239 Operating lease right-of-use assets 38,045 43,185 Intangible assets, net 1,124,768 1,204,658 Goodwill 1,648,145 1,648,145 Other assets 85,005 71,574 Total assets $ 3,398,061 $ 3,448,550 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 19,549 $ 14,361 Accrued compensation 43,735 69,330 Accrued liabilities 47,413 62,631 Operating lease liabilities 9,931 10,001 Total current liabilities 120,628 156,323 Long-term liabilities Long-term debt, net of issuance costs 982,105 1,056,301 Operating lease liabilities, non-current 36,228 42,219 Other long-term liabilities 23,501 22,962 Deferred tax liability 101,573 55,834 Total long-term liabilities 1,143,407 1,177,316 Total liabilities 1,264,035 1,333,639 Commitments and contingencies (see Note 5) Stockholders’ equity Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of October 31, 2025 and January 31, 2025, respectively — — Common stock, $ 0.0001 par value, 900,000 shares authorized, 85,615 and 86,536 shares issued and outstanding as of October 31, 2025 and January 31, 2025, respectively 9 9 Additional paid-in capital 1,917,244 1,905,628 Accumulated other comprehensive income 8,837 — Accumulated earnings 207,936 209,274 Total stockholders’ equity 2,134,026 2,114,911 Total liabilities and stockholders’ equity $ 3,398,061 $ 3,448,550 See accompanying notes to condensed consolidated financial statements. -3- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of operations (unaudited) Three months ended October 31, Nine months ended October 31, (in thousands, except per share data) 2025 2024 2025 2024 Revenue Service revenue $ 120,286 $ 119,174 $ 357,943 $ 354,108 Custodial revenue 159,067 140,953 475,398 401,281 Interchange revenue 42,811 40,305 145,502 132,568 Total revenue 322,164 300,432 978,843 887,957 Cost of revenue Service costs 76,889 86,860 240,050 246,122 Custodial costs 10,879 10,241 32,763 29,406 Interchange costs 6,333 6,305 21,061 24,213 Total cost of revenue 94,101 103,406 293,874 299,741 Gross profit 228,063 197,026 684,969 588,216 Operating expenses Sales and marketing 24,411 22,636 70,317 67,655 Technology and development 65,916 60,189 192,156 174,859 General and administrative 30,880 31,789 86,406 102,285 Amortization of acquired intangible assets 27,002 28,350 81,005 84,876 Merger integration 1,159 34,437 3,700 38,357 Total operating expenses 149,368 177,401 433,584 468,032 Income from operations 78,695 19,625 251,385 120,184 Other expense Interest expense ( 14,049 ) ( 18,155 ) ( 43,862 ) ( 45,377 ) Other income, net 2,886 4,748 9,010 11,266 Total other expense ( 11,163 ) ( 13,407 ) ( 34,852 ) ( 34,111 ) Income before income taxes 67,532 6,218 216,533 86,073 Income tax provision 15,840 515 51,072 15,735 Net income $ 51,692 $ 5,703 $ 165,461 $ 70,338 Net income per share: Basic $ 0.60 $ 0.07 $ 1.92 $ 0.81 Diluted $ 0.59 $ 0.06 $ 1.88 $ 0.79 Weighted-average number of shares used in computing net income per share: Basic 85,995 87,193 86,397 86,935 Diluted 86,970 88,634 87,799 88,699 See accompanying notes to condensed consolidated financial statements. -4- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of comprehensive income (unaudited) Three months ended October 31, Nine months ended October 31, (in thousands, except per share data) 2025 2024 2025 2024 Net income $ 51,692 $ 5,703 $ 165,461 $ 70,338 Other comprehensive income Cash flow hedges Net unrealized gains, net of income tax expense of $ 2,935 and $ 3,005 for the three and nine months ended October 31, 2025, respectively 8,634 — 8,837 — Total other comprehensive income 8,634 — 8,837 — Comprehensive income $ 60,326 $ 5,703 $ 174,298 $ 70,338 See accompanying notes to condensed consolidated financial statements. -5- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of stockholders’ equity (unaudited) Three months ended October 31, Nine months ended October 31, (in thousands) 2025 2024 2025 2024 Total stockholders' equity, beginning balance $ 2,146,421 $ 2,157,037 $ 2,114,911 $ 2,035,021 Common stock: Beginning balance 9 9 9 9 Issuance of common stock — — — — Ending balance 9 9 9 9 Additional paid-in capital: Beginning balance 1,919,312 1,886,765 1,905,628 1,829,384 Issuance of common stock 393 837 10,829 4,624 Stock-based compensation 20,542 21,123 53,946 74,717 Repurchases of common stock ( 23,003 ) ( 15,637 ) ( 53,159 ) ( 15,637 ) Ending balance 1,917,244 1,893,088 1,917,244 1,893,088 Accumulated other comprehensive income: Beginning balance 203 — — — Other comprehensive income 8,634 — 8,837 — Ending balance 8,837 — 8,837 — Accumulated earnings: Beginning balance 226,897 270,263 209,274 205,628 Repurchases of common stock ( 70,653 ) ( 44,376 ) ( 166,799 ) ( 44,376 ) Net income 51,692 5,703 165,461 70,338 Ending balance 207,936 231,590 207,936 231,590 Total stockholders' equity, ending balance $ 2,134,026 $ 2,124,687 $ 2,134,026 $ 2,124,687 See accompanying notes to condensed consolidated financial statements. -6- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) Nine months ended October 31, (in thousands) 2025 2024 Cash flows from operating activities: Net income $ 165,461 $ 70,338 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 115,975 123,269 Stock-based compensation 53,946 74,717 Amortization of debt discount and issuance costs 804 1,805 Loss on extinguishment of debt — 1,576 Deferred taxes 42,734 ( 10,065 ) Changes in operating assets and liabilities: Accounts receivable, net 6,763 ( 1,819 ) Prepaid expenses and other current and non-current assets ( 8,444 ) ( 11,672 ) Operating lease right-of-use assets 5,050 5,004 Accrued compensation ( 24,639 ) ( 3,161 ) Accounts payable, accrued liabilities, and other current liabilities ( 11,269 ) 24,757 Operating lease liabilities, non-current ( 5,963 ) ( 5,796 ) Other long-term liabilities ( 1,239 ) ( 4,845 ) Net cash provided by operating activities 339,179 264,108 Cash flows from investing activities: Purchases of software and capitalized software development costs ( 36,768 ) ( 37,900 ) Purchases of property and equipment ( 1,643 ) ( 1,756 ) Acquisitions of HSA portfolios ( 293 ) ( 452,241 ) Net cash used in investing activities ( 38,704 ) ( 491,897 ) Cash flows from financing activities: Principal payments on long-term debt ( 75,000 ) ( 536,875 ) Repurchases of common stock ( 218,234 ) ( 58,513 ) Proceeds from long-term debt — 736,875 Payment of debt issuance costs — ( 3,748 ) Settlement of client-held funds obligation, net 621 3,188 Proceeds from exercise of common stock options 5,449 5,046 Net cash provided by (used in) financing activities ( 287,164 ) 145,973 Increase (decrease) in cash and cash equivalents 13,311 ( 81,816 ) Beginning cash and cash equivalents 295,948 403,979 Ending cash and cash equivalents $ 309,259 $ 322,163 See accompanying notes to condensed consolidated financial statements. -7- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) (continued) Nine months ended October 31, (in thousands) 2025 2024 Supplemental cash flow data: Interest expense paid in cash $ 46,457 $ 50,203 Income tax payments, net 7,351 23,817 Supplemental disclosures of non-cash investing and financing activities: Purchases of software and capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation 3,447 4,754 Purchases of property and equipment included in accounts payable or accrued liabilities 101 106 Repurchases of common stock included in accrued liabilities 2,478 1,500 Exercise of common stock options receivable 5,390 7 Non-cash purchase consideration related to acquisitions of HSA portfolios — 20,325 See accompanying notes to condensed consolidated financial statements. -8- Table of Contents HealthEquity, Inc. and subsidiaries Notes to condensed consolidated financial statements (unaudited) Note 1. Summary of business and significant accounting policies Business HealthEquity, Inc. ("HealthEquity" or the "Company") was incorporated in the state of Delaware on September 18, 2002. 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. Principles of consolidation The Company consolidates entities in which the Company has a controlling financial interest, which includes all of its wholly owned direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Segments 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. 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, 2025 and for the three and nine months ended October 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. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025. The fiscal year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. Significant accounting policies 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. -9- Table of Contents Recently adopted accounting pronouncements None. Recently issued accounting pronouncements not yet adopted 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 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. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , which removes all references to project stages and establishes new criteria for the capitalization of internal-use software costs. The guidance will be effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. Upon adoption, the guidance may be applied prospectively, retrospectively, or on a modified retrospective basis, including for in-process projects. We are currently evaluating the ASU to determine its impact on our consolidated financial statements. Note 2. 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, (in thousands, except per share data) 2025 2024 2025 2024 Numerator (basic and diluted): Net income $ 51,692 $ 5,703 $ 165,461 $ 70,338 Denominator (basic): Weighted-average common shares outstanding 85,995 87,193 86,397 86,935 Denominator (diluted): Weighted-average common shares outstanding 85,995 87,193 86,397 86,935 Weighted-average dilutive effect of stock options and restricted stock units 975 1,441 1,402 1,764 Diluted weighted-average common shares outstanding 86,970 88,634 87,799 88,699 Net income per share: Basic $ 0.60 $ 0.07 $ 1.92 $ 0.81 Diluted $ 0.59 $ 0.06 $ 1.88 $ 0.79 For the three months ended October 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 nine months ended October 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. -10- Table of Contents Note 3. Supplemental financial statement information 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) October 31, 2025 January 31, 2025 Leasehold improvements $ 14,048 $ 13,966 Furniture and fixtures 6,478 6,708 Computer equipment 19,845 19,218 Property and equipment, gross 40,371 39,892 Accumulated depreciation ( 36,981 ) ( 36,653 ) Property and equipment, net $ 3,390 $ 3,239 Depreciation expense was $ 0.4 million and $ 1.5 million for the three and nine months ended October 31, 2025, respectively, and $ 1.0 million and $ 3.7 million for the three and nine months ended October 31, 2024, respectively. Contract balances The Company does not recognize revenue until its right to consideration is unconditional and therefore has no related contract assets. The Company records a receivable when revenue is recognized prior to payment and the Company has unconditional right to payment. 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, 2025 and January 31, 2025, the balance of deferred revenue was $ 8.6 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 90 % 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 in 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, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $ 3.1 million and $ 9.5 million, respectively. The Company expects to satisfy its remaining obligations for these arrangements. Leases The components of operating lease costs were as follows: Three months ended October 31, Nine months ended October 31, (in thousands) 2025 2024 2025 2024 Operating lease expense $ 2,234 $ 2,250 $ 6,708 $ 6,875 Sublease income ( 1,388 ) ( 987 ) ( 3,960 ) ( 2,944 ) Net operating lease expense $ 846 $ 1,263 $ 2,748 $ 3,931 Other income, net Other income, net, consisted of the following: Three months ended October 31, Nine months ended October 31, (in thousands) 2025 2024 2025 2024 Interest income $ 2,864 $ 3,897 $ 8,961 $ 10,881 Other income, net 22 851 49 385 Total other income, net $ 2,886 $ 4,748 $ 9,010 $ 11,266 -11- Table of Contents Supplemental cash flow information Supplemental cash flow information related to the Company's operating leases was as follows: Nine months ended October 31, (in thousands) 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 7,628 $ 7,354 Right-of-use assets obtained in exchange for lease obligations $ ( 90 ) $ 1,469 Note 4. Intangible assets and goodwill Intangible assets The gross carrying amount and associated accumulated amortization of intangible assets were as follows: October 31, 2025 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangible assets: Software and software development costs $ 345,967 $ ( 267,013 ) $ 78,954 Acquired HSA portfolios 737,304 ( 161,457 ) 575,847 Acquired customer relationships 759,782 ( 295,589 ) 464,193 Acquired developed technology 132,825 ( 127,051 ) 5,774 Acquired trade names 12,900 ( 12,900 ) — Total amortizable intangible assets $ 1,988,778 $ ( 864,010 ) $ 1,124,768 January 31, 2025 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangible assets: Software and software development costs $ 312,234 $ ( 234,102 ) $ 78,132 Acquired HSA portfolios 737,011 ( 124,606 ) 612,405 Acquired customer relationships 759,782 ( 256,820 ) 502,962 Acquired developed technology 132,825 ( 121,666 ) 11,159 Acquired trade names 12,900 ( 12,900 ) — Total amortizable intangible assets $ 1,954,752 $ ( 750,094 ) $ 1,204,658 Amortization expense was $ 38.4 million and $ 114.4 million for the three and nine months ended October 31, 2025, respectively, and $ 39.7 million and $ 119.5 million for the three and nine months ended October 31, 2024, respectively. Goodwill There were no changes to the carrying value of goodwill during the nine months ended October 31, 2025. Note 5. Commitments and contingencies Commitments 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 nine months ended October 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 -12- Table of Contents 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 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. 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. 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. It is not possible to determine the ultimate outcome or the duration of such litigation, governmental proceedings or claims, or the impact that such litigation, proceedings and claims will have on the Company’s financial position, results of operations, and cash flows. 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. 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. 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. Note 6. Indebtedness Long-term debt consisted of the following: (in thousands) October 31, 2025 January 31, 2025 4.50 % Senior Notes due 2029 $ 600,000 $ 600,000 Revolving Credit Facility 386,875 461,875 Principal amount 986,875 1,061,875 Less: unamortized discount and issuance costs (1) 4,770 5,574 Total debt, net 982,105 1,056,301 Less: current portion of long-term debt — — Long-term debt, net $ 982,105 $ 1,056,301 (1) In addition to the $ 4.8 million and $ 5.6 million of unamortized discount and issuance costs related to long-term debt as of October 31, 2025 and January 31, 2025, respectively, $ 6.4 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 October 31, 2025 and January 31, 2025, respectively. 4.50 % Senior Notes due 2029 On October 8, 2021, the Company completed its offering of $ 600 million aggregate principal amount of its 4.50 % Senior Notes due 2029 (the “Notes”). The Notes were issued under an indenture (the “Indenture”), dated October 8, 2021, among the Company, the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee. The Notes are guaranteed by each of the Company’s existing, wholly owned domestic subsidiaries that guarantees its obligations under the Credit Agreement (as defined below) and are required to be guaranteed by any of the Company’s future subsidiaries that guarantee its obligations under the Credit Agreement or certain of its other indebtedness. The Notes will mature on October 1, 2029. Interest on the Notes is payable on April 1 and October 1 -13- Table of Contents of each year. Accrued interest on the Notes was $ 2.3 million and $ 9.0 million as of October 31, 2025 and January 31, 2025, 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 %. The Notes are unsecured senior obligations of the Company and rank equally in right of payment to all of its existing and future senior unsecured debt and senior in right of payment to all of its future subordinated debt. The Notes are redeemable at the Company’s option, in whole or in part, at a redemption price if redeemed during the 12 months beginning (i) October 1, 2025 of 101.125 %, and (ii) October 1, 2026 and thereafter of 100.000 %, in each case of the principal amount of the Notes being redeemed, and together with accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company may be required to make an offer to purchase the Notes upon the sale of certain assets or upon specific kinds of changes of control. The Indenture contains covenants that impose significant operational and financial restrictions on the Company; however, these covenants generally align with the covenants contained in the Credit Agreement. See "Credit Agreement" below for a description of these covenants. 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), a portion of which was used to refinance the Company's prior credit agreement. 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, 2025, the outstanding balance under the Revolving Credit Facility was $ 386.9 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. Subject to the terms and conditions set forth in the Credit Agreement (including obtaining additional commitments from one or more new or existing lenders), the Company may in the future incur additional loans or commitments under the Credit Agreement in an aggregate principal amount of up to $ 450 million, plus an additional amount so long as the Company’s pro forma first lien net leverage ratio would not exceed 3.85 to 1.00 as of the date such loans or commitments are incurred. Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to, at the Company’s option, either (i) the secured overnight financing rate published by the CME Group Benchmark Administration Limited (“Term SOFR”) (subject to a 0.10 % “credit spread adjustment”) plus a margin ranging from 1.25 % to 2.50 % or (ii) an alternate base rate plus a margin ranging from 0.25 % to 1.50 %, with the applicable margin determined by reference to a leverage-based pricing grid set forth in the Credit Agreement. 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, 2025, the interest rate on the Revolving Credit Facility was 5.32 %. 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 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. The Company was in compliance with all covenants under the Credit Agreement as of October 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 -14- Table of Contents 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. Note 7. Income taxes 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, 2025, the Company recorded an income tax provision of $ 15.8 million and $ 51.1 million, respectively. This resulted in an effective income tax rate of 23.5 % and 23.6 % for the three and nine months ended October 31, 2025, respectively, compared with an effective income tax rate of 8.3 % and 18.3 % for the three and nine months ended October 31, 2024, respectively. For the three and nine months ended October 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 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 , adjustments to research and development tax credits, and an increase in unrecognized tax benefits. As of October 31, 2025 and January 31, 2025, the Company’s total gross unrecognized tax benefit was $ 26.8 million and $ 24.1 million, respectively. If recognized, $ 23.4 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of October 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 New York. Such examinations may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards. The Company concluded an examination by the state of Texas during the period ended October 31, 2025, and all necessary adjustments were immaterial. 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. Note 8. Stock-based compensation 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 October 31, Nine months ended October 31, (in thousands) 2025 2024 2025 2024 Cost of revenue $ 3,183 $ 3,751 $ 9,684 $ 11,210 Sales and marketing 3,491 3,700 9,890 11,873 Technology and development 5,981 6,353 17,633 18,747 General and administrative 7,887 7,319 16,739 32,887 Total stock-based compensation expense $ 20,542 $ 21,123 $ 53,946 $ 74,717 -15- Table of Contents Stock award plans 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 October 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 A summary of stock option activity is as follows: Outstanding stock options (in thousands, except for exercise prices and term) Number of options Range of exercise prices Weighted- average exercise price Weighted- average contractual term (in years) Aggregate intrinsic value Outstanding as of January 31, 2025 369 $ 21.27 - 73.61 $ 48.13 2.5 $ 22,957 Exercised ( 221 ) $ 21.27 - 73.61 $ 49.12 Outstanding as of October 31, 2025 148 $ 24.36 - 73.61 $ 46.67 1.8 $ 7,097 Vested and expected to vest as of October 31, 2025 148 $ 46.67 1.8 $ 7,097 Exercisable as of October 31, 2025 148 $ 46.67 1.8 $ 7,097 Restricted stock units A summary of restricted stock unit ("RSU") and performance restricted stock unit ("PRSU") activity is as follows: RSUs and PRSUs (in thousands, except weighted-average grant date fair value) Shares Weighted-average grant date fair value Outstanding as of January 31, 2025 2,882 $ 76.82 Granted 1,211 93.92 Vested ( 1,235 ) 83.99 Forfeited ( 422 ) 76.97 Outstanding as of October 31, 2025 2,436 $ 81.66 Performance restricted stock units. During the nine months ended October 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. 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 nine months ended October 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. The Company records stock-based compensation related to PRSUs over the requisite service period when it is considered probable that the performance conditions will be met. The Company believes it is probable that the PRSUs will vest at least in part. 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, 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 at least 10 years of service at the Company). As a result, the expense associated with PRSUs granted to retirement-eligible individuals was recorded on the grant date. -16- Table of Contents Note 9. Stockholders' equity 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 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 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 nine months ended October 31, 2025: Three months ended October 31, 2025 Nine months ended October 31, 2025 (in thousands) Shares Amount Shares Amount Common stock repurchases (1) 1,009 $ 93,656 2,376 $ 219,958 (1) Shares repurchased include unsettled repurchases as of October 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 October 31, 2025, $ 258.8 million of common stock remained authorized for repurchase under the Company's common stock repurchase program. Accumulated other comprehensive income As of October 31, 2025, AOCI consisted of unrealized gains on cash flow hedges, net. Note 10. 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 placements of HSA cash. 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 August 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 depository partners and insurance company partners. As of October 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 October 31, 2025, the weighted average interest rate indicated by the Company's Treasury bond forwards was 3.94 %. Notional amount of derivative contracts The notional amount of the Company's derivative instruments was as follows: (in thousands, except number of instruments) October 31, 2025 January 31, 2025 Number of instruments Notional Number of instruments Notional Treasury bond forwards 17 $ 2,250,000 — $ — -17- Table of Contents 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. October 31, 2025 Derivative assets Derivative liabilities (in thousands) Other current assets Other assets Accrued liabilities Other long-term liabilities Treasury bond forwards $ 6,845 $ 7,794 $ ( 1,019 ) $ ( 1,778 ) 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 October 31, Nine months ended October 31, (in thousands) 2025 2024 2025 2024 Treasury bond forwards $ 11,569 $ — $ 11,842 $ — No reclassification from AOCI to earnings was recorded with respect to the Company's derivatives during the nine months ended October 31, 2025 or 2024. The estimated net amount of existing gains reported in AOCI as of October 31, 2025 that is expected to be reclassified into earnings within the next 12 months is $ 1.0 million. Note 11. Fair value Fair value measurements are made at a specific point in time based on relevant market information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1—quoted prices in active markets for identical assets or liabilities; • Level 2—inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3—unobservable inputs based on the Company’s own assumptions. Cash and cash equivalents are considered Level 1 instruments and are valued based on publicly available daily net asset values. The carrying values of cash and cash equivalents approximate fair values due to the short-term nature of these instruments. 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, 2025, the fair value of the Notes was $ 584.3 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. As a result, the fair value of the Revolving Credit Facility approximates carrying value. 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. -18- Table of Contents