HEALTHEQUITY, INC. 10-K

Item 8. Financial statements and Supplementary Data HealthEquity, Inc. and subsidiaries Index to consolidated financial statements Page Report of independent registered public accounting firm (PCAOB ID 238 ) 48 Consolidated balance sheets as of January 31, 2026 and 2025 50 Consolidated statements of operations for the years ended January 31, 2026, 2025 and 2024 51 Consolidated statements of comprehensive income for the years ended January 31, 2026, 2025 and 2024 52 Consolidated statements of stockholders' equity for the years ended January 31, 2026, 2025 and 2024 53 Consolidated statements of cash flows for the years ended January 31, 2026, 2025 and 2024 54 Notes to consolidated financial statements 56 -47- Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of HealthEquity, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of HealthEquity, Inc. and its subsidiaries (the "Company") as of January 31, 2026 and 2025, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended January 31, 2026, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may -48- Table of Contents become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit and risk committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Service Revenue Recognition As described in Note 1 to the consolidated financial statements, the Company's primary sources of revenue are service, custodial, and interchange revenue. The Company’s service revenue was $485 million for the year ended January 31, 2026. To generate service revenue, the Company administers its platforms, prepares statements, provides a mechanism for spending funds, and provides customer support services. In addition, once a member’s health savings account (HSA) cash balance reaches a certain threshold, the member is able to invest their HSA assets through the Company's investment partner from which the Company earns recordkeeping fees, calculated as a percentage of the member's HSA investments. All of these services are consumed as they are received. The Company recognizes service revenue, in an amount that reflects the consideration it expects to be entitled to in exchange for those services, on a monthly basis as it satisfies its performance obligations. The principal consideration for our determination that performing procedures relating to service revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s service revenue recognition. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process for service revenue. These procedures also included, among others, evaluating the recognition of service revenue by obtaining confirmations from third parties, on a sample basis, obtaining and inspecting source documents, such as invoices, sales contracts, and cash receipts, on a sample basis, and developing independent expectations of certain service revenue and comparing the independent expectations to the amounts recorded. /s/ PricewaterhouseCoopers LLP Salt Lake City, Utah March 17, 2026 We have served as the Company’s auditor since 2013. -49- Table of Contents HealthEquity, Inc. and subsidiaries Consolidated balance sheets (in thousands, except par value) January 31, 2026 January 31, 2025 Assets Current assets Cash and cash equivalents $ 318,927 $ 295,948 Accounts receivable, net of allowance for doubtful accounts of $ 924 and $ 2,070 as of January 31, 2026 and 2025, respectively 123,696 118,006 Prepaid expenses and other current assets 69,658 63,795 Total current assets 512,281 477,749 Property and equipment, net 3,177 3,239 Operating lease right-of-use assets 36,310 43,185 Intangible assets, net 1,097,172 1,204,658 Goodwill 1,648,145 1,648,145 Other assets 83,247 71,574 Total assets $ 3,380,332 $ 3,448,550 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 12,159 $ 14,361 Accrued compensation 60,392 69,330 Accrued liabilities 74,388 62,631 Operating lease liabilities 9,911 10,001 Total current liabilities 156,850 156,323 Long-term liabilities Long-term debt, net of issuance costs 957,379 1,056,301 Operating lease liabilities, non-current 34,190 42,219 Other long-term liabilities 31,007 22,962 Deferred tax liability 93,710 55,834 Total long-term liabilities 1,116,286 1,177,316 Total liabilities 1,273,136 1,333,639 Commitments and contingencies (see Note 6) Stockholders’ equity Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of January 31, 2026 and 2025 — — Common stock, $ 0.0001 par value, 900,000 shares authorized, 85,007 and 86,536 shares issued and outstanding as of January 31, 2026 and 2025, respectively 8 9 Additional paid-in capital 1,916,989 1,905,628 Accumulated earnings 195,906 209,274 Accumulated other comprehensive loss ( 5,707 ) — Total stockholders’ equity 2,107,196 2,114,911 Total liabilities and stockholders’ equity $ 3,380,332 $ 3,448,550 The accompanying notes are an integral part of the consolidated financial statements. -50- Table of Contents HealthEquity, Inc. and subsidiaries Consolidated statements of operations Year ended January 31, (in thousands, except per share data) 2026 2025 2024 Revenue Service revenue $ 485,022 $ 478,317 $ 455,690 Custodial revenue 636,800 545,414 386,594 Interchange revenue 191,607 176,043 157,303 Total revenue 1,313,429 1,199,774 999,587 Cost of revenue Service costs 328,507 351,588 317,357 Custodial costs 43,821 39,675 32,502 Interchange costs 27,985 31,252 27,091 Total cost of revenue 400,313 422,515 376,950 Gross profit 913,116 777,259 622,637 Operating expenses Sales and marketing 95,240 90,739 79,273 Technology and development 262,510 239,513 218,811 General and administrative 119,933 132,260 103,656 Amortization of acquired intangible assets 107,953 111,878 92,763 Merger integration 5,024 40,535 10,435 Total operating expenses 590,660 614,925 504,938 Income from operations 322,456 162,334 117,699 Other expense Interest expense ( 57,131 ) ( 60,634 ) ( 55,455 ) Other income, net 12,107 14,334 12,796 Total other expense ( 45,024 ) ( 46,300 ) ( 42,659 ) Income before income taxes 277,432 116,034 75,040 Income tax provision 62,231 19,331 19,328 Net income $ 215,201 $ 96,703 $ 55,712 Net income per share: Basic $ 2.50 $ 1.11 $ 0.65 Diluted $ 2.46 $ 1.09 $ 0.64 Weighted-average number of shares used in computing net income per share: Basic 86,132 86,870 85,564 Diluted 87,473 88,828 86,957 The accompanying notes are an integral part of the consolidated financial statements. -51- Table of Contents HealthEquity, Inc. and subsidiaries Consolidated statements of comprehensive income Year ended January 31, (in thousands, except per share data) 2026 2025 2024 Net income $ 215,201 $ 96,703 $ 55,712 Other comprehensive loss Cash flow hedges Net unrealized losses ( 5,695 ) — — Reclassification of net gains included in net income ( 12 ) — — Net change, net of income tax benefit of $ 1,854 for the year ended January 31, 2026 ( 5,707 ) — — Total other comprehensive loss ( 5,707 ) — — Comprehensive income $ 209,494 $ 96,703 $ 55,712 See accompanying notes to consolidated financial statements. -52- Table of Contents HealthEquity, Inc. and subsidiaries Consolidated statements of stockholders’ equity Common stock Additional paid-in capital Accumulated earnings Accumulated other comprehensive loss Total stockholders' equity (in thousands) Shares Amount Balance as of January 31, 2023 84,758 $ 8 $ 1,745,716 $ 149,916 $ — $ 1,895,640 Issuance of common stock 1,369 1 6,517 — — 6,518 Stock-based compensation — — 77,151 — — 77,151 Net income — — — 55,712 — 55,712 Balance as of January 31, 2024 86,127 $ 9 $ 1,829,384 $ 205,628 $ — $ 2,035,021 Issuance of common stock 1,770 — 9,009 — — 9,009 Stock-based compensation — — 96,425 — — 96,425 Repurchases of common stock ( 1,361 ) — ( 29,190 ) ( 93,057 ) — ( 122,247 ) Net income — — — 96,703 — 96,703 Balance as of January 31, 2025 86,536 $ 9 $ 1,905,628 $ 209,274 $ — $ 2,114,911 Issuance of common stock 1,725 — 11,403 — — 11,403 Stock-based compensation — — 73,063 — — 73,063 Repurchases of common stock ( 3,254 ) ( 1 ) ( 73,105 ) ( 228,569 ) — ( 301,675 ) Other comprehensive loss — — — — ( 5,707 ) ( 5,707 ) Net income — — — 215,201 — 215,201 Balance as of January 31, 2026 85,007 $ 8 $ 1,916,989 $ 195,906 $ ( 5,707 ) $ 2,107,196 The accompanying notes are an integral part of the consolidated financial statements. -53- Table of Contents HealthEquity, Inc. and subsidiaries Consolidated statements of cash flows Year ended January 31, (in thousands) 2026 2025 2024 Cash flows from operating activities: Net income $ 215,201 $ 96,703 $ 55,712 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 154,657 162,451 153,078 Stock-based compensation 73,063 96,425 77,151 Amortization of debt issuance costs 1,078 2,067 2,852 Amortization of gains on derivatives ( 16 ) — — Loss on extinguishment of debt — 1,576 1,157 Deferred taxes 39,730 ( 12,836 ) ( 13,995 ) Changes in operating assets and liabilities: Accounts receivable ( 5,690 ) ( 13,113 ) ( 8,058 ) Prepaid expenses and other current and non-current assets ( 12,663 ) ( 11,790 ) ( 32,790 ) Operating lease right-of-use assets 6,785 6,664 10,190 Accrued compensation ( 8,806 ) 17,758 2,951 Accounts payable, accrued liabilities, and other current liabilities 1,708 8,888 ( 204 ) Operating lease liabilities, non-current ( 8,001 ) ( 7,779 ) ( 11,780 ) Other long-term liabilities 48 ( 7,158 ) 6,562 Net cash provided by operating activities 457,094 339,856 242,826 Cash flows from investing activities: Purchases of software and capitalized software development costs ( 46,515 ) ( 51,129 ) ( 41,123 ) Purchases of property and equipment ( 1,969 ) ( 2,084 ) ( 1,694 ) Acquisitions of HSA portfolios ( 293 ) ( 452,241 ) ( 3,257 ) Settlement of derivatives, net 1,637 — — Net cash used in investing activities ( 47,140 ) ( 505,454 ) ( 46,074 ) Cash flows from financing activities: Principal payments on long-term debt ( 100,000 ) ( 561,875 ) ( 54,375 ) Repurchases of common stock ( 299,254 ) ( 121,493 ) — Proceeds from long-term debt — 736,875 — Payment of debt issuance costs — ( 3,748 ) — Settlement of client-held funds obligation, net 867 ( 1,620 ) 865 Proceeds from exercise of common stock options 11,412 9,428 6,471 Net cash provided by (used in) financing activities ( 386,975 ) 57,567 ( 47,039 ) Increase (decrease) in cash and cash equivalents 22,979 ( 108,031 ) 149,713 Beginning cash and cash equivalents 295,948 403,979 254,266 Ending cash and cash equivalents $ 318,927 $ 295,948 $ 403,979 The accompanying notes are an integral part of the consolidated financial statements. -54- Table of Contents HealthEquity, Inc. and subsidiaries Consolidated statements of cash flows (continued) Year ended January 31, (in thousands) 2026 2025 2024 Supplemental cash flow data: Interest expense paid in cash $ 52,245 $ 58,587 $ 49,560 Income tax payments, net 8,042 26,069 35,352 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 4,332 5,971 3,145 Purchases of property and equipment included in accounts payable or accrued liabilities 16 45 263 Repurchases of common stock included in accrued liabilities 3,174 754 — Non-cash purchase consideration related to acquisitions of HSA portfolios — 20,325 — Settlement of derivatives included in other current assets 2,465 — — Exercise of common stock options receivable — 10 429 The accompanying notes are an integral part of the consolidated financial statements. -55- Table of Contents HealthEquity, Inc. and subsidiaries Notes to consolidated financial statements 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. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the consolidated financial statements. 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 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 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. Cash and cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company’s cash and cash equivalents were held in institutions in the U.S. and include deposits in a money market account that was unrestricted as to withdrawal or use. Client-held funds Many of the Company's client services agreements with employers (referred to as "Clients") provide that Clients remit funds to the Company to pre-fund Client and employee participant contributions related to flexible spending accounts and health reimbursement arrangements (“FSAs” and “HRAs,” respectively) and commuter accounts. These Client-held funds remitted to the Company do not represent cash assets of the Company to the extent that they are not combined with corporate cash and accordingly are not included in cash and cash equivalents on the Company's consolidated balance sheets. Accounts receivable Accounts receivable represent monies due to the Company for monthly service revenue, custodial revenue and interchange revenue. The Company maintains an allowance for doubtful accounts to reserve for expected credit losses from trade receivables considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions. In evaluating the Company’s ability to collect outstanding receivable balances, the Company considers various factors including macroeconomic variables, the age of the balance, the creditworthiness of the customer, which is assessed based on ongoing credit evaluations and payment history, and the customer’s current financial condition. -56- Table of Contents Other assets Other assets consist primarily of contract costs, prepaid expenditures, debt issuance costs, income tax receivables, and various other assets. Amounts expected to be recouped or recognized over a period of twelve months or less have been classified as current in the accompanying consolidated balance sheets. Leases The Company determines if a contract contains a lease at inception or any modification of the contract. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a specified period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Leases with an expected term of 12 months or less at commencement are not accounted for on the balance sheet. All operating lease expense is recognized on a straight-line basis over the expected lease term. Certain leases also include obligations to pay for non-lease services, such as utilities and common area maintenance. The services are accounted for separately from lease components, and the Company allocates payments to the lease and other services components based on estimated stand-alone prices. Operating lease right-of-use ("ROU") assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the rate implicit in each lease is not readily determinable, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Property and equipment Property and equipment, including leasehold improvements, are stated at cost less accumulated depreciation. Depreciation is determined using the straight-line method over the estimated useful lives of individual assets. The useful life for leasehold improvements is the shorter of the estimated useful life or the term of the lease ranging from 3 - 5 years. The useful life used for computing depreciation for all other asset classes is described below: Computer equipment 3 - 5 years Furniture and fixtures 5 years Maintenance and repairs are expensed when incurred, and improvements that extend the economic useful life of an asset are capitalized. Gains and losses on the disposal of property and equipment are reflected in operating expenses. Intangible assets, net Intangible assets are carried at cost and amortized, typically, on a straight-line basis over their estimated useful lives. The useful life used for computing amortization for all intangible asset classes is described below: Software and software development costs 3 years Acquired customer relationships 7 - 15 years Acquired developed technology 2 - 5 years Acquired trade names and trademarks 3 years Acquired HSA portfolios 15 years The Company accounts for the costs of computer software developed or obtained for internal use in accordance with Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software . Costs incurred during operation and post-implementation stages are charged to expense. Costs incurred during the application development stage that are directly attributable to developing or obtaining software for internal use are capitalized. Management’s judgment is required in determining the point when various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. Acquired customer relationships, developed technology, and trade names and trademarks are valued utilizing the discounted cash flow method, a form of the income approach. The useful lives of acquired customer relationships were estimated based on discount rates and revenue growth rates, net of attrition. The useful lives of developed technology and trade names were estimated based on expected obsolescence. The Company expenses the assets straight-line over the useful lives and determined that this amortization method is appropriate to reflect the pattern over which the economic benefits of these acquired assets are realized. -57- Table of Contents Acquired HSA portfolios consist of the contractual rights to administer the activities related to the individual HSAs acquired. The Company used its HSA customer relationship period assumption and the historical attrition rates of member accounts to determine that an average useful life of 15 years and the use of a straight-line amortization method are appropriate to reflect the pattern over which the economic benefits of existing member assets are realized. The Company reviews identifiable amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually on January 31 or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company’s impairment tests are based on a single operating segment and reporting unit structure. The goodwill impairment test involves a qualitative assessment to compare a reporting unit's fair value to its carrying value. If it is determined that it is more likely than not that a reporting unit's fair value is less than its carrying value, a quantitative comparison is made between the Company's market capitalization and the carrying value of the reporting unit, including goodwill. If the carrying value of the reporting unit exceeds its fair value, an impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. Self-insurance The Company is self-insured for medical insurance up to certain annual stop-loss limits. The Company establishes a liability as of the balance sheet date for claims, both reported and incurred but not reported, using currently available information as well as historical claims experience. Other long-term liabilities Other long-term liabilities consists of long-term deferred revenue and other liabilities that the Company does not expect to settle within one year. Derivative Financial Instruments and Hedging Activities As required by 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 consolidated balance sheets. The change in fair value of the derivatives is recorded to accumulated other comprehensive income or loss ("AOCI") in the Company's 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 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 11—Derivative financial instruments and hedging activities for further information. Revenue recognition The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company determines revenue recognition through the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, the Company satisfies a performance obligation. Disaggregation of revenue. The Company's primary sources of revenue are service, custodial, and interchange revenue and are disclosed in the consolidated statements of operations. All of the Company's sources of revenue are deemed to be revenue contracts with customers. Each revenue source is affected differently by economic factors as it relates to the nature, amount, timing and uncertainty. -58- Table of Contents Costs to obtain a contract. ASC 606, Revenue from contracts with customers , requires capitalizing the costs of obtaining a contract when those costs are expected to be recovered. In order to determine the amortization period for sales commissions contract costs, the Company applied the portfolio approach. Accordingly, the amortization period of the assets has been determined to be the average economic life of an HSA or other CDB relationship, which is estimated to be 15 years and 7 years, respectively. Amortization of capitalized sales commission contract costs is included in sales and marketing expenses in the consolidated statements of operations. The Company has applied the practical expedient which allows an entity to account for incremental costs of obtaining a contract at a portfolio level. The Company has also applied the practical expedient to recognize incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. Performance obligations. ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as permitted by ASC 606, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. Service revenue. The Company administers its platforms, prepares statements, provides a mechanism for spending funds, and provides customer support services. In addition, once a member’s HSA cash balance reaches a certain threshold, the member is able to invest their HSA assets through the Company's investment partner from which the Company earns recordkeeping and advisory fees, calculated as a percentage of the member's HSA investments. All of these services are consumed as they are received. The Company recognizes service revenue, in an amount that reflects the consideration it expects to be entitled to in exchange for those services, on a monthly basis as it satisfies its performance obligations. Custodial revenue. The Company earns custodial revenue primarily from HSA cash placed in group annuity contracts or similar arrangements with insurance company partners or deposited with depository partners and Client-held funds deposited with depository partners. The placement of funds represents a service that is simultaneously received and consumed by the insurance company partners and depository partners. The Company recognizes custodial revenue each month, in an amount that reflects the consideration it expects to be entitled to in exchange for the service. Interchange revenue. The Company satisfies its interchange performance obligation each time payments are made with its cards via payment networks. The Company recognizes interchange revenue, in an amount that reflects the consideration it expects to be entitled to in exchange for the service, in the month the payment transaction occurs. 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. Significant judgments. The Company makes no significant judgments in determining the amount or timing of revenue recognition. The Company has estimated the average economic life of an HSA or CDB customer relationship, which has been determined to be the amortization period for capitalized sales commissions and other contract costs. Cost of revenue The Company incurs cost of revenue related to servicing member accounts, managing customer and partner relationships, and processing reimbursement claims. Expenditures include personnel-related costs, depreciation, amortization, stock-based compensation, common expense allocations, costs to reimburse members from outside fraud activity, new member and participant supplies, and other operating costs of the member account servicing departments. Other components of the Company’s cost of revenue include interest retained by members on custodial assets held and interchange costs incurred in connection with processing card transactions initiated by members. Stock-based compensation The Company grants restricted stock units ("RSUs") to certain team members, executive officers, and directors. The Company recognizes compensation expense for stock-based awards based on the grant date estimated fair value. Expense for stock-based awards is generally recognized on a straight-line basis over the requisite service period and is reversed as pre-vesting forfeitures occur. The fair value of RSUs is based on the current value of the -59- Table of Contents Company's closing stock price on the date of grant less the present value of future expected dividends discounted at the risk-free interest rate. For stock-based awards with performance conditions, the Company evaluates the probability of achieving the performance criteria and of the number of shares that are expected to vest, and compensation expense is then adjusted to reflect the number of shares expected to vest and recorded over the requisite service period. For awards with performance conditions, compensation expense is recognized using the graded-vesting attribution method in accordance with the provisions of ASC 718, Compensation—Stock Compensation ("Topic 718"). Compensation expense related to stock-based awards with market conditions is recorded on a straight-line basis over the requisite service period regardless of whether the market condition is satisfied. Upon the exercise of a stock option or release of an RSU, common shares are issued from authorized, but not outstanding, common stock. Interest expense Interest expense consists primarily of accrued interest expense and amortization of deferred financing costs associated with the Company's long-term debt. Other income, net Other income, net, consists of interest income earned on corporate cash and other miscellaneous income and expense. Income tax provision The Company accounts for income taxes and the related accounts under the asset and liability method as set forth in ASC 740, Income Taxes . Under this method, current tax liabilities and assets are recognized for the estimated taxes payable or refundable on the tax returns for the current fiscal year. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, for net operating losses, and for tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for when it is more likely than not that some or all of the deferred tax assets may not be realized in future years. The Company recognizes the tax benefit from an uncertain tax position taken or expected to be taken in a tax return using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authorities, based on the technical merits of the position. For tax positions that are more likely than not to be sustained upon audit, the second step is to measure the tax benefit in the financial statements as the largest benefit that has a greater than 50% likelihood of being sustained upon settlement. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of other income, net in the consolidated statements of operations. Changes in facts and circumstances could have a material impact on the Company’s effective tax rate and results of operations. Asset acquisitions The Company routinely acquires rights to be the custodian of HSA portfolios, in which substantially all of the fair value of the gross portfolio assets acquired is concentrated in a group of similar HSA assets and therefore the acquisitions do not constitute a business. Accordingly, the acquisitions are accounted for under the asset acquisition method of accounting in accordance with ASC 805-50, Business Combinations—Related Issues . Under the asset acquisition method of accounting, the Company is required to fair value the assets transferred. The cost of the assets acquired, including transaction costs incurred in conjunction with an asset acquisition, is allocated to the individual assets acquired based on their relative fair values and does not give rise to goodwill. Business combinations Consideration paid for the acquisition of a business as defined by ASC 805-10 is allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date. Acquisition-related expenses incurred in conjunction with the acquisition of a business are recognized in earnings in the period in which they are incurred and are included in other income, net on the consolidated statements of operations. -60- Table of Contents Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management has made estimates in several areas, including the average economic life of an HSA or CDB customer relationship, the allowance for doubtful accounts, capitalized software development costs, the valuation of derivative assets and liabilities, evaluating goodwill and long-lived assets for impairment, the useful lives of property and equipment and intangible assets, accrued compensation, accrued liabilities, the grant date fair value of performance restricted stock units, and income taxes. Actual results could differ from those estimates. Recently adopted accounting pronouncements In December 2023, the Financial Accounting Standards Board ("FASB") issued 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. The Company adopted ASU 2023-09 for the fiscal year ended January 31, 2026, and applied the new disclosure requirements retrospectively. The impact of the adopted ASU is not material to our income tax disclosures. Recently issued accounting pronouncements not yet adopted 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 evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures. Note 2. Net income per share The following table sets forth the computation of basic and diluted net income per share: Year ended January 31, (in thousands, except per share data) 2026 2025 2024 Numerator (basic and diluted): Net income $ 215,201 $ 96,703 $ 55,712 Denominator (basic): Weighted-average common shares outstanding 86,132 86,870 85,564 Denominator (diluted): Weighted-average common shares outstanding 86,132 86,870 85,564 Weighted-average dilutive effect of stock options and restricted stock units 1,341 1,958 1,393 Diluted weighted-average common shares outstanding 87,473 88,828 86,957 Net income per share: Basic $ 2.50 $ 1.11 $ 0.65 Diluted $ 2.46 $ 1.09 $ 0.64 For the fiscal years ended January 31, 2026, 2025 and 2024, 0.1 million, 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. -61- Table of Contents Note 3. Supplemental financial statement information Selected consolidated balance sheet and consolidated statement of operations components consisted of the following: Allowance for doubtful accounts As of January 31, 2026 and 2025, the Company had an allowance for doubtful accounts of $ 0.9 million and $ 2.1 million, respectively. During the fiscal years ended January 31, 2026, 2025, and 2024, the Company recorded credit losses from trade receivables of $ 0.8 million, $ 0.2 million, and $ 1.7 million, respectively. Costs to obtain a contract As of January 31, 2026 and 2025, the net amount capitalized as contract costs was $ 60.6 million and $ 60.3 million, respectively, which is included in other current assets and other assets. Amortization of capitalized contract costs during the fiscal years ended January 31, 2026, 2025, and 2024 was $ 7.8 million, $ 6.7 million, and $ 5.4 million, respectively. Property and equipment Property and equipment consisted of the following as of January 31, 2026 and 2025: (in thousands) January 31, 2026 January 31, 2025 Leasehold improvements $ 14,140 $ 13,966 Furniture and fixtures 6,453 6,708 Computer equipment 19,902 19,218 Property and equipment, gross 40,495 39,892 Accumulated depreciation ( 37,318 ) ( 36,653 ) Property and equipment, net $ 3,177 $ 3,239 Depreciation expense for the fiscal years ended January 31, 2026, 2025 and 2024 was $ 2.0 million, $ 4.6 million and $ 8.8 million, respectively. Contract balances As of January 31, 2026 and 2025, the balance of deferred revenue was $ 6.7 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 twelve months or less are classified as accrued liabilities in the Company's consolidated balance sheets, with the remainder included within other long-term liabilities. Revenue recognized during the fiscal year that was included in the beginning balance of deferred revenue was $ 12.0 million. The Company expects to satisfy its remaining obligations for these arrangements. Other income, net Other income, net, consisted of the following: Year ended January 31, (in thousands) 2026 2025 2024 Interest income $ 11,729 $ 13,914 $ 12,138 Other miscellaneous income 378 420 658 Total other income, net $ 12,107 $ 14,334 $ 12,796 Note 4. Leases The Company has entered into various non-cancelable operating lease agreements for office space, data storage facilities, and other leases with remaining lease terms of less than 1 year to approximately 5 years, often with one or more Company options to renew. These renewal terms can extend the lease term from 5 to 10 years and are included in the lease term when it is reasonably certain that the Company will exercise the option. -62- Table of Contents The components of operating lease expense were as follows: Year ended January 31, (in thousands) 2026 2025 2024 Operating lease expense $ 8,942 $ 9,125 $ 9,437 Sublease income ( 5,344 ) ( 4,097 ) ( 2,680 ) Net operating lease expense $ 3,598 $ 5,028 $ 6,757 Weighted average lease term and discount rate were as follows: January 31, 2026 January 31, 2025 Weighted average remaining lease term 4.8 years 5.7 years Weighted average discount rate 4.4 % 4.4 % Lease liabilities were as follows: (in thousands) January 31, 2026 January 31, 2025 Gross lease liabilities $ 48,953 $ 59,209 Less: imputed interest ( 4,852 ) ( 6,989 ) Present value of lease liabilities 44,101 52,220 Less: current portion of lease liabilities ( 9,911 ) ( 10,001 ) Lease liabilities, non-current $ 34,190 $ 42,219 Supplemental cash flow information related to the Company's operating leases was as follows: Year ended January 31, (in thousands) 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 10,186 $ 9,874 Right-of-use assets obtained in exchange for lease obligations $ ( 90 ) $ 1,469 Note 5. Intangible assets and goodwill Intangible assets The gross carrying amount and associated accumulated amortization of intangible assets were as follows: January 31, 2026 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangible assets: Software and software development costs $ 356,597 $ ( 278,291 ) $ 78,306 Acquired HSA portfolios 737,304 ( 173,687 ) 563,617 Acquired customer relationships 759,782 ( 308,512 ) 451,270 Acquired developed technology 132,825 ( 128,846 ) 3,979 Acquired trade names 12,900 ( 12,900 ) — Total amortizable intangible assets $ 1,999,408 $ ( 902,236 ) $ 1,097,172 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 -63- Table of Contents During the fiscal years ended January 31, 2026 and 2025, the Company capitalized $ 0.3 million and $ 472.6 million, respectively, to acquire the rights to act as a custodian of HSA portfolios. Amortization expense for the fiscal years ended January 31, 2026, 2025, and 2024 was $ 152.7 million, $ 157.8 million and $ 144.3 million, respectively. Estimated amortization expense for the fiscal years ending January 31 is as follows: Year ending January 31, (in thousands) 2027 $ 144,373 2028 126,628 2029 106,946 2030 97,609 2031 96,579 Thereafter 525,037 Total $ 1,097,172 Goodwill The Company’s annual goodwill impairment test resulted in no impairment charges in any of the periods presented in the accompanying consolidated financial statements. There were no changes to the carrying value of goodwill during the fiscal years ended January 31, 2026 or 2025. Note 6. Commitments and contingencies Commitments The following table summarizes the payments due by fiscal year for the Company's outstanding contractual obligations as of January 31, 2026: Payments due by fiscal year (in thousands) 2027 2028 2029 2030 2031 Thereafter Total 4.50 % Senior Notes due 2029 (1) $ — $ — $ — $ 600,000 $ — $ — $ 600,000 Revolving Credit Facility (1) — — — 361,875 — — 361,875 Interest on long-term debt obligations (2) 45,425 45,425 45,476 26,935 — — 163,261 Operating lease obligations (3) 10,148 10,323 10,553 10,789 7,140 — 48,953 Other contractual obligations (4) 66,124 54,693 13,050 4,146 851 — 138,864 Total $ 121,697 $ 110,441 $ 69,079 $ 1,003,745 $ 7,991 $ — $ 1,312,953 (1) As of January 31, 2026, the outstanding combined principal of $ 961.9 million is presented net of debt issuance costs on the consolidated balance sheets. The debt issuance costs are not included in the table above. (2) Estimated interest payments assume the stated interest rates applicable to the Notes and Revolving Credit Facility as of January 31, 2026, which were 4.50 % and 5.02 % per annum, respectively. (3) The Company leases office space and data storage facilities and has other non-cancelable operating leases expiring at various dates through 2030. These amounts exclude contractual sublease income of $ 22.5 million, which is expected to be received through December 2030. (4) Other contractual obligations consist of services agreements, purchase obligations, and other contractual commitments. 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 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 2024 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. 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, -64- Table of Contents 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 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 7. Indebtedness Long-term debt consisted of the following: (in thousands) January 31, 2026 January 31, 2025 4.50 % Senior Notes due 2029 $ 600,000 $ 600,000 Revolving Credit Facility 361,875 461,875 Principal amount 961,875 1,061,875 Less: unamortized discount and issuance costs (1) 4,496 5,574 Total debt, net 957,379 1,056,301 Less: current portion of long-term debt — — Long-term debt, net $ 957,379 $ 1,056,301 (1) In addition to the $ 4.5 million and $ 5.6 million of unamortized discount and issuance costs related to the Notes as of January 31, 2026 and 2025, respectively, $ 5.9 million and $ 7.7 million of unamortized issuance costs related to the Company's Revolving Credit Facility are included within other assets in the consolidated balance sheets as of January 31, 2026 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 of each year. As of January 31, 2026, the balance of accrued interest on the Notes was $ 9.0 million, which is included within accrued liabilities on the Company's 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 -65- Table of Contents 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 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. 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 January 31, 2026, the interest rate on the Revolving Credit Facility was 5.02 %. 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 January 31, 2026 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. -66- Table of Contents Note 8. Income taxes The income tax provision consisted of the following: Year ended January 31, (in thousands) 2026 2025 2024 Current: Federal $ 18,693 $ 25,949 $ 29,376 State 3,776 6,211 3,947 Total current tax provision $ 22,469 $ 32,160 $ 33,323 Deferred: Federal $ 36,679 $ ( 11,886 ) $ ( 11,004 ) State 3,083 ( 943 ) ( 2,991 ) Total deferred tax provision (benefit) $ 39,762 $ ( 12,829 ) $ ( 13,995 ) Total income tax provision $ 62,231 $ 19,331 $ 19,328 Total income tax provision differed from the amounts computed by applying the U.S. federal statutory tax rate to income before income taxes as a result of the following (pursuant to ASU 2023-09 disclosure requirements): Year ended January 31, (in thousands, except percentages) 2026 2025 2024 Federal statutory tax rate $ 58,261 21.0 % $ 24,367 21.0 % $ 15,759 21.0 % State and local income taxes, net of federal income tax effect (1) 5,367 1.9 % 4,365 3.8 % 441 0.6 % Tax credits Research and development tax credits ( 2,413 ) ( 1.0 ) % ( 4,625 ) ( 4.0 ) % ( 3,019 ) ( 4.0 ) % Other ( 123 ) 0.0 % ( 230 ) ( 0.2 ) % ( 112 ) ( 0.1 ) % Nontaxable or nondeductible items Share-based payment awards ( 5,080 ) ( 1.8 ) % ( 12,529 ) ( 10.8 ) % 258 0.3 % Excessive employee remuneration 5,120 1.9 % 6,782 5.8 % 2,939 3.9 % Other 1,014 0.4 % 1,240 1.1 % 587 0.8 % Changes in unrecognized tax benefits 76 0.0 % ( 39 ) 0.0 % ( 47 ) ( 0.1 ) % Other adjustments IRS examination settlement — 0.0 % — 0.0 % 2,461 3.3 % Other 9 0.0 % — 0.0 % 61 0.1 % Effective tax rate $ 62,231 22.4 % $ 19,331 16.7 % $ 19,328 25.8 % (1) The following states and local jurisdictions contribute the majority (more than 50%) of the tax effect to this category. For the tax year ended January 31, 2026: California, Pennsylvania, Texas, Utah, and Iowa. For the tax year ended January 31, 2025: California, Texas, New Jersey, Pennsylvania, Iowa, and Illinois. For the tax year ended January 31, 2024: California, Texas, and Utah. The Company’s effective tax rate for the fiscal years ended January 31, 2026, 2025, and 2024 was 22.4 %, 16.7 %, and 25.8 %, respectively. The difference between the effective tax rate and the U.S. federal statutory tax rate each period is impacted by a number of factors, including the relative mix of earnings among state jurisdictions, credits, excess tax benefits or shortfalls on stock-based compensation expense, changes in unrecognized tax benefits and valuation allowance, and other items. The increase in the effective tax rate for the fiscal year ended January 31, 2026 compared to the fiscal year ended January 31, 2025 was primarily due to an increase in pre-tax book income, a reduction in tax benefit from stock-based compensation expense, and a decrease in research and development tax credits net of unrecognized tax benefits, partially offset by tax benefit from deferred tax rate adjustments due to state apportionment changes and a decrease in excessive employee remuneration. The decrease in the effective tax rate for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024 was primarily due to an increase in tax benefit from stock-based compensation expense and a decrease in expense from unrecognized tax benefits, partially offset by an increase in pre-tax book income, an increase in nondeductible executive compensation, and increased expense from deferred tax rate adjustments due to state apportionment changes. -67- Table of Contents Net income tax payments by jurisdiction consisted of the following (pursuant to ASU 2023-09 disclosure requirements): Year ended January 31, (in thousands) 2026 2025 2024 Federal $ 5,000 $ 20,000 $ 30,500 California 787 * * Pennsylvania 441 * * Other 1,814 6,069 4,852 State and local 3,042 6,069 4,852 Total net income tax payments $ 8,042 $ 26,069 $ 35,352 * Jurisdiction was below the 5% of total (net) income tax payments threshold for the period Deferred tax assets and liabilities consisted of the following: (in thousands) January 31, 2026 January 31, 2025 Deferred tax assets: Net operating loss carryforward $ 732 $ 1,120 Stock compensation 8,266 11,937 Research and development credits 3,618 4,160 Lease liabilities 10,894 13,245 Capitalized research and development 18,771 53,238 Fixed assets 813 1,083 Accruals and reserves 5,174 5,099 Other, net 4,499 6,632 Total gross deferred tax assets $ 52,767 $ 96,514 Less valuation allowance ( 1,057 ) ( 1,066 ) Deferred tax assets, net of valuation allowance 51,710 95,448 Deferred tax liabilities: Intangible assets ( 73,260 ) ( 84,120 ) Incremental contract costs ( 14,904 ) ( 15,282 ) Right-of-use assets ( 8,931 ) ( 10,926 ) Goodwill ( 45,680 ) ( 38,205 ) Other, net ( 2,645 ) ( 2,749 ) Total gross deferred tax liabilities ( 145,420 ) ( 151,282 ) Net deferred tax liabilities $ ( 93,710 ) $ ( 55,834 ) Management considered whether it is more likely than not that some portion or all of the deferred tax assets would be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considered the scheduled reversal of deferred tax liabilities in making this assessment and determined that based on the weight of all available evidence, it is more likely than not (i.e., a likelihood of more than 50%) that the Company will be able to realize all of its federal deferred tax assets and the majority of its state deferred tax assets. The Company recorded a valuation allowance of $ 1.1 million as of both January 31, 2026 and 2025, related to certain state deferred tax assets. As of January 31, 2026, the Company had recorded state net operating loss carryforwards of $ 11.2 million, which begin to expire at various intervals beginning with the tax year ending January 31, 2036. As of January 31, 2026, the Company also had state research and development tax credit carryforwards of $ 12.5 million, which begin to expire at various intervals beginning with the tax year ending January 31, 2027. As of January 31, 2026 and 2025, the gross unrecognized tax benefit was $ 27.4 million and $ 24.1 million, respectively. If recognized, $ 24.1 million and $ 20.9 million of the total unrecognized tax benefits would affect the -68- Table of Contents Company's effective tax rate as of January 31, 2026 and 2025, respectively. Total gross unrecognized tax benefits increased by $ 3.3 million in the period from January 31, 2025 to January 31, 2026. A tabular reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: (in thousands) January 31, 2026 January 31, 2025 Gross unrecognized tax benefits at beginning of year $ 24,140 $ 19,213 Gross amounts of increases and decreases: Increases as a result of tax positions taken during a prior period — 1,004 Decreases as a result of tax positions taken during a prior period ( 96 ) — Increases as a result of tax positions taken during the current period 4,012 5,076 Decreases as a result of settlement ( 150 ) — Decreases resulting from the lapse of the applicable statute of limitations ( 501 ) ( 1,153 ) Gross unrecognized tax benefits at end of year $ 27,405 $ 24,140 Certain unrecognized tax benefits are required to be netted against their related deferred tax assets as a result of ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists . The resulting unrecognized tax benefit recorded within the Company's consolidated balance sheet excludes the following amounts that have been netted against the related deferred tax assets accordingly: (in thousands) January 31, 2026 January 31, 2025 Total gross unrecognized tax benefits $ 27,405 $ 24,140 Amounts netted against related deferred tax assets ( 8,002 ) ( 8,363 ) Unrecognized tax benefits recorded on the consolidated balance sheet $ 19,403 $ 15,777 The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of other income, net in the consolidated statements of operations. During the fiscal years ended January 31, 2026, 2025, and 2024, the Company recorded penalties and interest of $ 0.7 million, $ 0.6 million, and $ 0.1 million, respectively, related to unrecognized tax benefits. As of January 31, 2026 and 2025, the Company recorded accrued interest and penalties of $ 2.7 million and $ 2.0 million, respectively. The Company files income tax returns with U.S. federal and state taxing jurisdictions and is currently under examination by the state of California. Such tax 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 examinations by the states of Texas and New York during the fiscal year ended January 31, 2026, 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. In July 2025, the “One Big Beautiful Bill Act” was signed into law. The most significant provision for the Company is the immediate expensing of domestic research and experimental expenditures. Other 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 year ended January 31, 2026 were significantly reduced, and tax payments for the year ending 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. -69- Table of Contents Note 9. Stock-based compensation The following table shows a summary of stock-based compensation in the Company's consolidated statements of operations during the fiscal years presented: Year ended January 31, (in thousands) 2026 2025 2024 Cost of revenue $ 12,686 $ 14,955 $ 16,462 Sales and marketing 13,093 15,623 13,182 Technology and development 23,167 25,002 20,891 General and administrative 24,117 40,845 26,616 Total stock-based compensation expense $ 73,063 $ 96,425 $ 77,151 The following table shows stock-based compensation by award type: Year ended January 31, (in thousands) 2026 2025 2024 Restricted stock units $ 66,659 $ 66,986 $ 60,688 Performance restricted stock units 6,404 29,439 16,384 Stock options — — 79 Total stock-based compensation expense $ 73,063 $ 96,425 $ 77,151 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 January 31, 2026, 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 2.9 million. Stock options Under the terms of the Incentive Plan, the Company has the ability to grant incentive and nonstatutory stock options. Such stock options are to be exercisable at prices, as determined by the board of directors, which must be equal to no less than the fair value of the Company's common stock at the date of the grant. Stock options granted under the Incentive Plan generally expire 10 years from the date of issuance or are forfeited 90 days after termination of employment. No stock options were granted during the fiscal years ended January 31, 2026, 2025, or 2024. A summary of stock option activity is as follows: 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 ( 236 ) $ 21.27 - 73.61 $ 48.52 Outstanding as of January 31, 2026 133 $ 24.36 - 73.61 $ 47.50 1.6 $ 5,081 Vested and expected to vest as of January 31, 2026 133 $ 47.50 1.6 $ 5,081 Exercisable as of January 31, 2026 133 $ 47.50 1.6 $ 5,081 The aggregate intrinsic value in the table above represents the difference between the fair value of common stock and the exercise price of outstanding, in-the-money stock options. The total intrinsic value of options exercised during the fiscal years ended January 31, 2026, 2025 and 2024 was $ 13.8 million, $ 21.7 million, and $ 10.1 million, respectively. As of January 31, 2026, there was no unrecorded stock-based compensation expense associated with stock options, and all outstanding stock options were vested. Restricted stock units The Company grants RSUs to certain team members, officers, and directors under the Incentive Plan, which vest upon service-based criteria and performance-based criteria. The weighted-average fair value of RSUs granted -70- Table of Contents during the fiscal years ended January 31, 2026, 2025 and 2024 was $ 93.70 , $ 86.07 and $ 64.16 per share, respectively. Service-based restricted stock units. Service-based RSUs generally vest 25 % on the first anniversary of the vesting commencement date, which is generally the first day of the fiscal quarter of the grant date, with the remaining portion vesting ratably over the following 12 calendar quarters. Service-based RSUs are valued based on the Company's closing stock price on the date of grant less the present value of future expected dividends discounted at the risk-free interest rate. Performance restricted stock units. During the fiscal year ended January 31, 2026, the Company awarded 139,451 performance restricted stock units ("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 fiscal year ended January 31, 2026, 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 fiscal year ended January 31, 2026 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. A summary of RSU and 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 1,283 93.70 Vested ( 1,490 ) 80.85 Forfeited ( 507 ) 76.38 Outstanding as of January 31, 2026 2,168 $ 84.15 During the fiscal years ended January 31, 2026, 2025 and 2024, the aggregate intrinsic value of RSUs vested was $ 132.7 million, $ 118.8 million, and $ 69.3 million, respectively. As of January 31, 2026, total unrecorded stock-based compensation expense associated with RSUs was $ 132.7 million, which was expected to be recognized over a weighted-average period of 2.2 years. Note 10. 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. Under the 2025 Stock Repurchase Program, the Company may purchase up to an additional $ 300 million of its common stock, as market conditions warrant. -71- Table of Contents 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 periods presented: Year ended January 31, 2026 2025 (in thousands) Shares Amount Shares Amount Common stock repurchases (1) 3,254 $ 301,675 1,361 $ 122,247 (1) Shares repurchased include unsettled repurchases as of January 31, 2026. 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 January 31, 2026, $ 177.7 million of common stock remained authorized for repurchase under the Company's 2025 Stock Repurchase Program. Accumulated other comprehensive loss As of January 31, 2026, AOCI consisted of unrealized losses on cash flow hedges, net. The following table summarizes the changes in AOCI: (in thousands) Change in unrealized losses on cash flow hedges Income tax benefit Total Beginning balance $ — $ — $ — Other comprehensive loss before reclassifications ( 7,545 ) 1,850 ( 5,695 ) Amounts reclassified from AOCI ( 16 ) 4 ( 12 ) Net change in AOCI ( 7,561 ) 1,854 ( 5,707 ) Ending balance $ ( 7,561 ) $ 1,854 $ ( 5,707 ) Adequacy of net worth In February 2006, HealthEquity received designation by the U.S. Department of Treasury to act as a passive non-bank custodian, which allows HealthEquity to hold custodial assets for individual account holders. On July 24, 2017, HealthEquity received designation by the U.S. Department of Treasury to act as both a passive and non-passive non-bank custodian, which allows HealthEquity to hold custodial assets for individual account holders and use discretion to direct investment of such assets held. As a passive and non-passive non-bank custodian according to Treasury Regulations section 1.408-2(e)(5)(ii)(B), the Company must maintain net worth (assets minus liabilities) greater than the sum of 2 % of passive custodial funds held at each fiscal year-end and 4 % of the non-passive custodial funds held at each fiscal year-end in order to take on additional custodial assets. As of January 31, 2026, the Company's year-end for trust and tax purposes, the net worth of the Company exceeded the required thresholds. Note 11. Derivative financial instruments and hedging activities Yields paid by the Company's insurance company partners and depository 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 March 2026 to January 2028, 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 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 and depository partners. As of January 31, 2026, each of the -72- Table of Contents Company's derivatives was designated as a cash flow hedge. The Company did not use derivatives prior to fiscal 2026. As of the January 31, 2026, the weighted average interest rate indicated by the Company's Treasury bond forwards was 3.92 %. Notional amount of derivative contracts The notional amount of the Company's derivative instruments was as follows: (in thousands, except number of instruments) January 31, 2026 January 31, 2025 Number of instruments Notional Number of instruments Notional Treasury bond forwards 18 $ 2,350,000 — $ — Fair value of derivative contracts The table below presents the fair value of the Company’s derivatives as well as their classification in the consolidated balance sheet. January 31, 2026 Derivative assets Derivative liabilities (in thousands) Other current assets Other assets Accrued liabilities Other long-term liabilities Treasury bond forwards $ — $ 3,285 $ ( 6,935 ) $ ( 7,997 ) Effect of derivatives on the consolidated financial statements The pre-tax losses on the Company's cash flow hedges recognized in AOCI were as follows: (in thousands) Year ended January 31, 2026 2025 2024 Treasury bond forwards $ ( 7,545 ) $ — $ — Total amounts presented in the consolidated statements of operations Year ended January 31, 2026 (in thousands) Custodial revenue Income tax provision Total reclassifications Treasury bond forwards Amount of gains reclassified from AOCI $ 16 $ ( 4 ) $ 12 As of January 31, 2026, the estimated amount of AOCI that is expected to be reclassified into earnings within the next 12 months is a net gain of $ 0.4 million. Note 12. 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. -73- Table of Contents 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 January 31, 2026, the fair value of the Notes was $ 587.0 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 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. Note 13. Employee benefits The Company has established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the IRS Code. All non-seasonal team members over the age of 18 are eligible to participate in the plan. The plan provides for Company matching of employee contributions up to 3.5 % of eligible earnings. Employer matching contribution expense was $ 8.4 million, $ 8.4 million and $ 8.7 million for the fiscal years ended January 31, 2026, 2025 and 2024, respectively. The Company is self-insured for medical and dental benefits for all qualifying employees. The medical plan carries a stop-loss policy which will protect from individual claims during the plan year exceeding $ 600,000 . The Company records estimates of costs of claims incurred based on an analysis of historical data and independent estimates. The Company's liability for self-insured medical claims is included in accrued compensation in its consolidated balance sheet and was $ 8.0 million and $ 5.2 million as of January 31, 2026 and 2025, respectively. -74- Table of Contents Item 9. Changes in and disagreements with accountants on accounting and financial disclosure None.