HEALTHEQUITY, INC. 10-Q

Item 1. Financial statements HealthEquity, Inc. and subsidiaries Condensed consolidated balance sheets (in thousands, except par value) April 30, 2026 January 31, 2026 (unaudited) Assets Current assets Cash and cash equivalents $ 265,369 $ 318,927 Accounts receivable, net of allowance for doubtful accounts of $ 953 and $ 924 as of April 30, 2026 and January 31, 2026, respectively 122,003 123,696 Prepaid expenses and other current assets 79,156 69,658 Total current assets 466,528 512,281 Property and equipment, net 3,800 3,177 Operating lease right-of-use assets 34,578 36,310 Intangible assets, net 1,073,045 1,097,172 Goodwill 1,648,145 1,648,145 Other assets 80,090 83,247 Total assets $ 3,306,186 $ 3,380,332 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 14,219 $ 12,159 Accrued compensation 26,664 60,392 Accrued liabilities 84,941 74,388 Operating lease liabilities 9,916 9,911 Total current liabilities 135,740 156,850 Long-term liabilities Long-term debt, net of issuance costs 942,656 957,379 Operating lease liabilities, non-current 32,110 34,190 Other long-term liabilities 52,932 31,007 Deferred tax liability 95,353 93,710 Total long-term liabilities 1,123,051 1,116,286 Total liabilities 1,258,791 1,273,136 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 April 30, 2026 and January 31, 2026, respectively — — Common stock, $ 0.0001 par value, 900,000 shares authorized, 83,927 and 85,007 shares issued and outstanding as of April 30, 2026 and January 31, 2026, respectively 8 8 Additional paid-in capital 1,901,935 1,916,989 Accumulated earnings 177,204 195,906 Accumulated other comprehensive loss ( 31,752 ) ( 5,707 ) Total stockholders’ equity 2,047,395 2,107,196 Total liabilities and stockholders’ equity $ 3,306,186 $ 3,380,332 See accompanying notes to condensed consolidated financial statements. -3- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of operations (unaudited) Three months ended April 30, (in thousands, except per share data) 2026 2025 Revenue Service revenue $ 122,932 $ 119,784 Custodial revenue 174,334 156,455 Interchange revenue 57,375 54,605 Total revenue 354,641 330,844 Cost of revenue Service costs 78,326 88,005 Custodial costs 11,655 10,747 Interchange costs 8,348 7,781 Total cost of revenue 98,329 106,533 Gross profit 256,312 224,311 Operating expenses Sales and marketing 26,833 25,984 Technology and development 67,767 61,436 General and administrative 31,131 25,536 Amortization of acquired intangible assets 26,515 27,002 Merger integration 1,113 1,275 Total operating expenses 153,359 141,233 Income from operations 102,953 83,078 Other expense Interest expense ( 12,588 ) ( 14,858 ) Other income, net 2,048 2,733 Total other expense ( 10,540 ) ( 12,125 ) Income before income taxes 92,413 70,953 Income tax provision 22,995 17,038 Net income $ 69,418 $ 53,915 Net income per share: Basic $ 0.82 $ 0.62 Diluted $ 0.82 $ 0.61 Weighted-average number of shares used in computing net income per share: Basic 84,413 86,655 Diluted 85,006 88,415 See accompanying notes to condensed consolidated financial statements. -4- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of comprehensive income (unaudited) Three months ended April 30, (in thousands, except per share data) 2026 2025 Net income $ 69,418 $ 53,915 Other comprehensive loss Cash flow hedges Net unrealized losses ( 25,897 ) — Reclassification of net gains included in net income ( 148 ) — Net change, net of income tax benefit of $ 8,463 for the three months ended April 30, 2026 ( 26,045 ) — Total other comprehensive loss ( 26,045 ) — Comprehensive income $ 43,373 $ 53,915 See accompanying notes to condensed consolidated financial statements. -5- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of stockholders’ equity (unaudited) Three months ended April 30, (in thousands) 2026 2025 Total stockholders' equity, beginning balance $ 2,107,196 $ 2,114,911 Common stock: Beginning balance 8 9 Issuance of common stock — — Ending balance 8 9 Additional paid-in capital: Beginning balance 1,916,989 1,905,628 Issuance of common stock 418 955 Stock-based compensation 19,406 14,336 Repurchases of common stock ( 34,878 ) ( 15,475 ) Ending balance 1,901,935 1,905,444 Accumulated earnings: Beginning balance 195,906 209,274 Repurchases of common stock ( 88,120 ) ( 44,836 ) Net income 69,418 53,915 Ending balance 177,204 218,353 Accumulated other comprehensive loss: Beginning balance ( 5,707 ) — Other comprehensive loss ( 26,045 ) — Ending balance ( 31,752 ) — Total stockholders' equity, ending balance $ 2,047,395 $ 2,123,806 See accompanying notes to condensed consolidated financial statements. -6- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) Three months ended April 30, (in thousands) 2026 2025 Cash flows from operating activities: Net income $ 69,418 $ 53,915 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 38,214 38,741 Stock-based compensation 19,406 14,336 Amortization of debt discount and issuance costs 277 265 Amortization of gains on derivatives ( 196 ) — Deferred taxes 10,106 1,324 Changes in operating assets and liabilities: Accounts receivable, net 1,693 1,750 Prepaid expenses and other current and non-current assets ( 11,690 ) ( 5,702 ) Operating lease right-of-use assets 1,732 1,649 Accrued compensation ( 31,242 ) ( 42,210 ) Accounts payable, accrued liabilities, and other current liabilities ( 873 ) 3,422 Operating lease liabilities, non-current ( 2,080 ) ( 1,968 ) Other long-term liabilities 2,761 ( 784 ) Net cash provided by operating activities 97,526 64,738 Cash flows from investing activities: Purchases of software and capitalized software development costs ( 15,930 ) ( 16,057 ) Purchases of property and equipment ( 362 ) ( 86 ) Settlement of derivatives, net 2,388 — Net cash used in investing activities ( 13,904 ) ( 16,143 ) Cash flows from financing activities: Repurchases of common stock ( 123,314 ) ( 59,065 ) Principal payments on long-term debt ( 15,000 ) — Settlement of client-held funds obligation, net 716 1,451 Proceeds from exercise of common stock options 418 965 Net cash used in financing activities ( 137,180 ) ( 56,649 ) Decrease in cash and cash equivalents ( 53,558 ) ( 8,054 ) Beginning cash and cash equivalents 318,927 295,948 Ending cash and cash equivalents $ 265,369 $ 287,894 See accompanying notes to condensed consolidated financial statements. -7- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) (continued) Three months ended April 30, (in thousands) 2026 2025 Supplemental cash flow data: Interest expense paid in cash $ 18,512 $ 20,809 Income tax refunds, net ( 451 ) ( 46 ) 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 2,001 2,774 Purchases of property and equipment included in accounts payable or accrued liabilities 765 546 Repurchases of common stock included in accrued liabilities 2,858 2,000 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 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 April 30, 2026 and for the three months ended April 30, 2026 and 2025 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, 2026. 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 There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026. Recently adopted accounting pronouncements None. Recently issued accounting pronouncements not yet adopted In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. -9- Table of Contents 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 April 30, (in thousands, except per share data) 2026 2025 Numerator (basic and diluted): Net income $ 69,418 $ 53,915 Denominator (basic): Weighted-average common shares outstanding 84,413 86,655 Denominator (diluted): Weighted-average common shares outstanding 84,413 86,655 Weighted-average dilutive effect of stock options and restricted stock units 593 1,760 Diluted weighted-average common shares outstanding 85,006 88,415 Net income per share: Basic $ 0.82 $ 0.62 Diluted $ 0.82 $ 0.61 For the three months ended April 30, 2026 and 2025, 0.4 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. 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) April 30, 2026 January 31, 2026 Leasehold improvements $ 14,673 $ 14,140 Furniture and fixtures 6,452 6,453 Computer equipment 20,394 19,902 Property and equipment, gross 41,519 40,495 Accumulated depreciation ( 37,719 ) ( 37,318 ) Property and equipment, net $ 3,800 $ 3,177 Depreciation expense was $ 0.5 million and $ 0.7 million for the three months ended April 30, 2026 and 2025, 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 -10- Table of Contents April 30, 2026 and January 31, 2026, the balance of deferred revenue was $ 5.0 million and $ 6.7 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 88 % 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 months ended April 30, 2026 that was included in the balance of deferred revenue as of January 31, 2026 was $ 3.1 million. The Company expects to satisfy its remaining obligations for these arrangements. Leases The components of operating lease costs were as follows: Three months ended April 30, (in thousands) 2026 2025 Operating lease expense $ 2,209 $ 2,240 Sublease income ( 1,375 ) ( 1,235 ) Net operating lease expense $ 834 $ 1,005 Other income, net Other income, net, consisted of the following: Three months ended April 30, (in thousands) 2026 2025 Interest income $ 1,887 $ 2,733 Other miscellaneous income, net 161 — Total other income, net $ 2,048 $ 2,733 Supplemental cash flow information Supplemental cash flow information related to the Company's operating leases was as follows: Three months ended April 30, (in thousands) 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 2,552 $ 2,529 Right-of-use assets obtained in exchange for lease obligations $ — $ ( 90 ) Note 4. Intangible assets and goodwill Intangible assets The gross carrying amount and associated accumulated amortization of intangible assets were as follows: April 30, 2026 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangible assets: Software and software development costs $ 370,113 $ ( 289,418 ) $ 80,695 Acquired HSA portfolios 737,304 ( 185,800 ) 551,504 Acquired customer relationships 759,782 ( 321,436 ) 438,346 Acquired developed technology 132,825 ( 130,325 ) 2,500 Acquired trade names 12,900 ( 12,900 ) — Total amortizable intangible assets $ 2,012,924 $ ( 939,879 ) $ 1,073,045 -11- Table of Contents 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 Amortization expense was $ 37.7 million and $ 38.1 million for the three months ended April 30, 2026 and 2025, respectively. Goodwill There were no changes to the carrying value of goodwill during the three months ended April 30, 2026. 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. During the three months ended April 30, 2026, the Company prepaid $ 15.0 million under its credit agreement. There were no other material changes during the three months ended April 30, 2026, 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, 2026. 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 fiscal 2025 in which a business partner's user account containing personally identifiable information was breached, the Company is subject to a consolidated putative class action lawsuit in federal court in the District of Utah. The plaintiffs in this legal action allege that the Company failed to implement reasonable data security practices, which resulted in a breach and disclosure of plaintiffs' and others' personally identifiable information and protected health information. The plaintiffs are seeking, among other damages, unspecified monetary damages, equitable relief, costs, and attorneys' fees arising out of the incident. On December 13, 2024, the Company filed a motion to dismiss the class action and a motion to compel arbitration. 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. On May 15, 2026, the Company filed its renewed motion to compel arbitration. The Company intends to vigorously defend itself against this legal action. In addition, the Company is subject to several regulatory inquiries related to the cybersecurity incident. The amount of the potential loss associated with the lawsuit 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 -12- Table of Contents 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) April 30, 2026 January 31, 2026 4.50 % Senior Notes due 2029 $ 600,000 $ 600,000 Revolving Credit Facility 346,875 361,875 Principal amount 946,875 961,875 Less: unamortized discount and issuance costs (1) 4,219 4,496 Total debt, net 942,656 957,379 Less: current portion of long-term debt — — Long-term debt, net $ 942,656 $ 957,379 (1) In addition to the $ 4.2 million and $ 4.5 million of unamortized discount and issuance costs related to the Notes as of April 30, 2026 and January 31, 2026, respectively, $ 5.5 million and $ 5.9 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 April 30, 2026 and January 31, 2026, 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 April 30, 2026 and January 31, 2026, the balance of accrued interest on the Notes was $ 2.3 million and $ 9.0 million , respectively, which is included within accrued liabilities on the Company's condensed consolidated balance sheets. The effective interest rate on the Notes is 4.72 %. 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 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 -13- Table of Contents 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 April 30, 2026, the interest rate on the Revolving Credit Facility was 5.00 %. 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 April 30, 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. Note 7. Income taxes The Company follows Accounting Standards Codification ("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 months ended April 30, 2026 and 2025, the Company recorded an income tax provision of $ 23.0 million and $ 17.0 million, respectively. This resulted in an effective income tax rate of 24.9 % for the three months ended April 30, 2026, compared with an effective income tax rate of 24.0 % for the three months ended April 30, 2025. For the three months ended April 30, 2026, discrete tax items impacting the effective tax rate were primarily due to tax benefit from stock-based compensation expense. For the three months ended April 30, 2025, discrete tax items impacting the effective tax rate were primarily due to tax benefit from stock-based compensation expense and changes to net state deferred tax liabilities due to state apportionment changes. As of April 30, 2026 and January 31, 2026, the Company’s total gross unrecognized tax benefit was $ 28.4 million and $ 27.4 million, respectively. If recognized, $ 25.0 million of the total gross unrecognized tax benefit would affect the Company's effective tax rate as of April 30, 2026. As of April 30, 2026, $ 17.2 million of federal income tax payable is included within accrued liabilities on the Company's condensed consolidated balance sheets. The Company files income tax returns with U.S. federal and state taxing jurisdictions and is currently under examination by the state of California. This tax examination may lead to ordinary course adjustments or proposed -14- Table of Contents adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards. As a result of the Company's net operating loss carryforwards and tax credit carryforwards, the Company remains subject to examination by one or more jurisdictions for tax years after 2006. 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 April 30, (in thousands) 2026 2025 Cost of revenue $ 2,787 $ 3,387 Sales and marketing 4,524 4,870 Technology and development 3,953 5,920 General and administrative 8,142 159 Total stock-based compensation expense $ 19,406 $ 14,336 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 April 30, 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 1.8 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, 2026 133 $ 24.36 - 73.61 $ 47.50 1.6 $ 5,081 Exercised ( 15 ) $ 24.36 - 44.53 $ 27.84 Outstanding as of April 30, 2026 118 $ 25.06 - 73.61 $ 50.01 1.5 $ 3,781 Vested and expected to vest as of April 30, 2026 118 $ 50.01 1.5 $ 3,781 Exercisable as of April 30, 2026 118 $ 50.01 1.5 $ 3,781 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, 2026 2,168 $ 84.15 Granted 1,235 87.65 Vested ( 432 ) 78.15 Forfeited ( 123 ) 94.43 Outstanding as of April 30, 2026 2,848 $ 86.13 Performance restricted stock units. During the three months ended April 30, 2026, the Company awarded 240,239 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, 2029. The Company used a Monte Carlo simulation to determine that the grant date fair value of the awards was $ 28.8 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. -15- Table of Contents In addition, during the three months ended April 30, 2026, the Company awarded 80,081 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2029. 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 three months ended April 30, 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. As a result, the expense associated with PRSUs granted to retirement-eligible individuals was recorded on the grant date. Note 9. Stockholders' equity Stock repurchase program In August 2024, the Company's board of directors authorized the repurchase of up to $ 300 million of its common stock. In June 2025, the board of directors increased the common stock repurchase authorization by $ 300 million. 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 common stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of common stock and may be suspended or discontinued at any time. The following table sets forth the common stock repurchased and subsequently retired during the three months ended April 30, 2026: Three months ended April 30, 2026 (in thousands) Shares Amount Common stock repurchases (1) 1,522 $ 122,998 (1) Shares repurchased include unsettled repurchases as of April 30, 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 April 30, 2026, $ 55.6 million of common stock remained authorized for repurchase under the common stock repurchase program. In May 2026, the board of directors increased the common stock repurchase authorization by $ 1.0 billion. Accumulated other comprehensive loss As of April 30, 2026, accumulated other comprehensive income or loss ("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 Balances as of January 31, 2026 $ ( 7,561 ) $ 1,854 $ ( 5,707 ) Other comprehensive loss before reclassifications ( 34,312 ) 8,415 ( 25,897 ) Amounts reclassified from AOCI ( 196 ) 48 ( 148 ) Net change in AOCI ( 34,508 ) 8,463 ( 26,045 ) Balances as of April 30, 2026 $ ( 42,069 ) $ 10,317 $ ( 31,752 ) -16- Table of Contents Note 10. 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 June 2026 to January 2029, resulting in cash settlement for the difference between the fixed price and the market price on that date. The parties may elect net settlement of multiple transactions under certain conditions; however, the Company presents its derivative assets and liabilities on a gross basis on its condensed consolidated balance sheets. The gain or loss on the derivative is recorded in AOCI and subsequently reclassified into custodial revenue in the same periods during which the hedged transaction affects custodial revenue earned from the Company's insurance company partners and depository partners. As of April 30, 2026, each of the Company's derivatives was designated as a cash flow hedge. As of the April 30, 2026, the weighted average interest rate indicated by the Company's Treasury bond forwards was 3.91 %. Notional amount of derivative contracts The notional amount of the Company's derivative instruments was as follows: (in thousands, except number of instruments) April 30, 2026 January 31, 2026 Number of instruments Notional Number of instruments Notional Treasury bond forwards 26 $ 3,495,000 18 $ 2,350,000 Fair value of derivative contracts The tables below present the fair value of the Company’s derivatives as well as their classification in the condensed consolidated balance sheet. April 30, 2026 Derivative assets Derivative liabilities (in thousands) Other current assets Other assets Accrued liabilities Other long-term liabilities Treasury bond forwards $ 666 $ — $ ( 19,387 ) $ ( 27,161 ) 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 condensed consolidated financial statements The pre-tax losses on the Company's cash flow hedges recognized in AOCI were as follows: Three months ended April 30, (in thousands) 2026 2025 Treasury bond forwards $ 34,312 $ — Total amounts presented in the condensed consolidated statements of operations Three months ended April 30, 2026 2025 (in thousands) Custodial revenue Income tax provision Total reclassifications Custodial revenue Income tax provision Total reclassifications Treasury bond forwards Amount of gains reclassified from AOCI $ 196 $ ( 48 ) $ 148 $ — $ — $ — -17- Table of Contents As of April 30, 2026, the estimated amount of AOCI that is expected to be reclassified into earnings within the next 12 months is a net loss of $ 1.2 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 April 30, 2026, the fair value of the Notes was $ 583.5 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