HEALTHEQUITY, INC. 10-Q

Item 1. Financial statements HealthEquity, Inc. and subsidiaries Condensed consolidated balance sheets (in thousands, except par value) July 31, 2026 January 31, 2026 (unaudited) Assets Current assets Cash and cash equivalents $ 256,003 $ 318,927 Accounts receivable, net of allowance for doubtful accounts of $ 1,067 and $ 924 as of July 31, 2026 and January 31, 2026, respectively 122,193 123,696 Prepaid expenses and other current assets 82,008 69,658 Total current assets 460,204 512,281 Property and equipment, net 4,823 3,177 Operating lease right-of-use assets 32,874 36,310 Intangible assets, net 1,047,797 1,097,172 Goodwill 1,648,145 1,648,145 Other assets 77,520 83,247 Total assets $ 3,271,363 $ 3,380,332 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 8,592 $ 12,159 Accrued compensation 37,913 60,392 Accrued liabilities 97,300 74,388 Operating lease liabilities 9,970 9,911 Total current liabilities 153,775 156,850 Long-term liabilities Long-term debt, net of issuance costs 931,062 957,379 Operating lease liabilities, non-current 29,984 34,190 Other long-term liabilities 73,999 31,007 Deferred tax liability 92,433 93,710 Total long-term liabilities 1,127,478 1,116,286 Total liabilities 1,281,253 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 July 31, 2026 and January 31, 2026, respectively — — Common stock, $ 0.0001 par value, 900,000 shares authorized, 82,909 and 85,007 shares issued and outstanding as of July 31, 2026 and January 31, 2026, respectively 8 8 Additional paid-in capital 1,896,571 1,916,989 Accumulated earnings 162,583 195,906 Accumulated other comprehensive loss ( 69,052 ) ( 5,707 ) Total stockholders’ equity 1,990,110 2,107,196 Total liabilities and stockholders’ equity $ 3,271,363 $ 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 July 31, Six months ended July 31, (in thousands, except per share data) 2026 2025 2026 2025 Revenue Service revenue $ 124,444 $ 117,873 $ 247,376 $ 237,657 Custodial revenue 175,936 159,876 350,270 316,331 Interchange revenue 50,352 48,086 107,727 102,691 Total revenue 350,732 325,835 705,373 656,679 Cost of revenue Service costs 73,170 75,156 151,496 163,161 Custodial costs 12,083 11,137 23,738 21,884 Interchange costs 7,525 6,947 15,873 14,728 Total cost of revenue 92,778 93,240 191,107 199,773 Gross profit 257,954 232,595 514,266 456,906 Operating expenses Sales and marketing 23,215 19,922 50,048 45,906 Technology and development 73,923 64,804 141,690 126,240 General and administrative 34,869 29,990 66,000 55,526 Amortization of acquired intangible assets 26,286 27,001 52,801 54,003 Merger integration 971 1,266 2,084 2,541 Total operating expenses 159,264 142,983 312,623 284,216 Income from operations 98,690 89,612 201,643 172,690 Other expense Interest expense ( 12,605 ) ( 14,955 ) ( 25,193 ) ( 29,813 ) Other income, net 1,780 3,391 3,828 6,124 Total other expense ( 10,825 ) ( 11,564 ) ( 21,365 ) ( 23,689 ) Income before income taxes 87,865 78,048 180,278 149,001 Income tax provision 22,221 18,194 45,216 35,232 Net income $ 65,644 $ 59,854 $ 135,062 $ 113,769 Net income per share: Basic $ 0.79 $ 0.69 $ 1.61 $ 1.31 Diluted $ 0.78 $ 0.68 $ 1.60 $ 1.29 Weighted-average number of shares used in computing net income per share: Basic 83,374 86,550 83,885 86,601 Diluted 84,014 87,746 84,578 88,153 See accompanying notes to condensed consolidated financial statements. -4- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of comprehensive income (unaudited) Three months ended July 31, Six months ended July 31, (in thousands) 2026 2025 2026 2025 Net income $ 65,644 $ 59,854 $ 135,062 $ 113,769 Other comprehensive income (loss) Cash flow hedges Net unrealized gains (losses) ( 37,322 ) 203 ( 63,219 ) 203 Reclassification of net (gains) losses included in net income 22 — ( 126 ) — Net change, net of income tax benefit (expense) of $ 12,135 , $( 70 ), $ 20,598 , and $( 70 ), respectively ( 37,300 ) 203 ( 63,345 ) 203 Total other comprehensive income (loss) ( 37,300 ) 203 ( 63,345 ) 203 Comprehensive income $ 28,344 $ 60,057 $ 71,717 $ 113,972 See accompanying notes to condensed consolidated financial statements. -5- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of stockholders’ equity (unaudited) Three months ended July 31, Six months ended July 31, (in thousands) 2026 2025 2026 2025 Total stockholders' equity, beginning balance $ 2,047,395 $ 2,123,806 $ 2,107,196 $ 2,114,911 Common stock: Beginning balance 8 9 8 9 Issuance of common stock — — — — Ending balance 8 9 8 9 Additional paid-in capital: Beginning balance 1,901,935 1,905,444 1,916,989 1,905,628 Issuance of common stock 297 9,481 716 10,436 Stock-based compensation 22,210 19,068 41,616 33,404 Repurchases of common stock ( 27,871 ) ( 14,681 ) ( 62,750 ) ( 30,156 ) Ending balance 1,896,571 1,919,312 1,896,571 1,919,312 Accumulated earnings: Beginning balance 177,204 218,353 195,906 209,274 Repurchases of common stock ( 80,265 ) ( 51,310 ) ( 168,385 ) ( 96,146 ) Net income 65,644 59,854 135,062 113,769 Ending balance 162,583 226,897 162,583 226,897 Accumulated other comprehensive income (loss): Beginning balance ( 31,752 ) — ( 5,707 ) — Other comprehensive income (loss) ( 37,300 ) 203 ( 63,345 ) 203 Ending balance ( 69,052 ) 203 ( 69,052 ) 203 Total stockholders' equity, ending balance $ 1,990,110 $ 2,146,421 $ 1,990,110 $ 2,146,421 See accompanying notes to condensed consolidated financial statements. -6- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) Six months ended July 31, (in thousands) 2026 2025 Cash flows from operating activities: Net income $ 135,062 $ 113,769 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 80,169 77,195 Stock-based compensation 41,616 33,404 Amortization of debt discount and issuance costs 558 533 Amortization of gains on derivatives ( 168 ) — Deferred taxes 19,321 30,711 Changes in operating assets and liabilities: Accounts receivable, net 1,503 6,842 Prepaid expenses and other current and non-current assets ( 12,581 ) ( 20,650 ) Operating lease right-of-use assets 3,436 3,339 Accrued compensation ( 21,095 ) ( 35,032 ) Accounts payable, accrued liabilities, and other current liabilities ( 13,595 ) ( 3,785 ) Operating lease liabilities, non-current ( 4,206 ) ( 3,951 ) Other long-term liabilities 3,665 ( 1,771 ) Net cash provided by operating activities 233,685 200,604 Cash flows from investing activities: Capitalized software development costs ( 30,720 ) ( 26,464 ) Purchases of property and equipment ( 1,340 ) ( 859 ) Settlement of derivatives, net ( 7,759 ) — Net cash used in investing activities ( 39,819 ) ( 27,323 ) Cash flows from financing activities: Repurchases of common stock ( 231,054 ) ( 125,810 ) Principal payments on long-term debt ( 26,875 ) ( 50,000 ) Settlement of client-held funds obligation, net 480 596 Proceeds from exercise of common stock options 659 10,446 Net cash used in financing activities ( 256,790 ) ( 164,768 ) Increase (decrease) in cash and cash equivalents ( 62,924 ) 8,513 Beginning cash and cash equivalents 318,927 295,948 Ending cash and cash equivalents $ 256,003 $ 304,461 See accompanying notes to condensed consolidated financial statements. -7- HealthEquity, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) (continued) Six months ended July 31, (in thousands) 2026 2025 Supplemental cash flow data: Interest expense paid in cash $ 23,350 $ 28,362 Income tax payments, net 35,586 6,507 Supplemental disclosures of non-cash investing and financing activities: Capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation 3,434 3,380 Purchases of property and equipment included in accounts payable or accrued liabilities 1,294 155 Repurchases of common stock included in accrued liabilities 3,255 1,246 Exercise of common stock options receivable 57 — 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 July 31, 2026 and for the three and six months ended July 31, 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 July 31, Six months ended July 31, (in thousands, except per share data) 2026 2025 2026 2025 Numerator (basic and diluted): Net income $ 65,644 $ 59,854 $ 135,062 $ 113,769 Denominator (basic): Weighted-average common shares outstanding 83,374 86,550 83,885 86,601 Denominator (diluted): Weighted-average common shares outstanding 83,374 86,550 83,885 86,601 Weighted-average dilutive effect of stock options and restricted stock units 640 1,196 693 1,552 Diluted weighted-average common shares outstanding 84,014 87,746 84,578 88,153 Net income per share: Basic $ 0.79 $ 0.69 $ 1.61 $ 1.31 Diluted $ 0.78 $ 0.68 $ 1.60 $ 1.29 For each of the three months ended July 31, 2026 and 2025, 0.2 million shares attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive. For the six months ended July 31, 2026 and 2025, 0.2 million and 0.1 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive. 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) July 31, 2026 January 31, 2026 Leasehold improvements $ 15,276 $ 14,140 Furniture and fixtures 6,453 6,453 Computer equipment 20,933 19,902 Property and equipment, gross 42,662 40,495 Accumulated depreciation ( 37,839 ) ( 37,318 ) Property and equipment, net $ 4,823 $ 3,177 Depreciation expense was $ 0.5 million for each of the three months ended July 31, 2026 and 2025, and $ 1.0 million and $ 1.1 million for the six months ended July 31, 2026 and 2025, respectively. -10- Table of Contents 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 July 31, 2026 and January 31, 2026, the balance of deferred revenue was $ 3.1 million and $ 6.7 million, respectively. The balances are related to cash received in advance for up-front fees, interchange revenue arrangements, and other commuter deferred revenue. The Company expects to recognize approximately 82 % of its balance of deferred revenue as revenue over the next 12 months and the remainder thereafter. Amounts expected to be recognized as revenue within a period of 12 months or less are classified as accrued liabilities in the Company's condensed consolidated balance sheets, with the remainder included within other long-term liabilities. Revenue recognized during the three and six months ended July 31, 2026 that was included in the balance of deferred revenue as of January 31, 2026 was $ 2.2 million and $ 5.3 million, respectively. The Company expects to satisfy its remaining obligations for these arrangements. Leases The components of net operating lease expense were as follows: Three months ended July 31, Six months ended July 31, (in thousands) 2026 2025 2026 2025 Operating lease expense $ 2,159 $ 2,234 $ 4,368 $ 4,474 Sublease income ( 968 ) ( 1,338 ) ( 2,344 ) ( 2,572 ) Net operating lease expense $ 1,191 $ 896 $ 2,024 $ 1,902 Other income, net Other income, net, consisted of the following: Three months ended July 31, Six months ended July 31, (in thousands) 2026 2025 2026 2025 Interest income $ 1,760 $ 3,364 $ 3,647 $ 6,097 Other miscellaneous income, net 20 27 181 27 Total other income, net $ 1,780 $ 3,391 $ 3,828 $ 6,124 Supplemental cash flow information Supplemental cash flow information related to the Company's operating leases was as follows: Six months ended July 31, (in thousands) 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,078 $ 5,075 Right-of-use assets obtained in exchange for lease obligations $ — $ ( 90 ) -11- Table of Contents Note 4. Intangible assets and goodwill Intangible assets The gross carrying amount and associated accumulated amortization of intangible assets were as follows: July 31, 2026 (in thousands) Gross carrying amount Accumulated amortization Net carrying amount Amortizable intangible assets: Software and software development costs $ 382,991 $ ( 301,258 ) $ 81,733 Acquired HSA portfolios 737,304 ( 197,913 ) 539,391 Acquired customer relationships 759,782 ( 334,359 ) 425,423 Acquired developed technology 132,825 ( 131,575 ) 1,250 Acquired trade names 12,900 ( 12,900 ) — Total amortizable intangible assets $ 2,025,802 $ ( 978,005 ) $ 1,047,797 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 $ 41.5 million and $ 38.0 million for the three months ended July 31, 2026 and 2025, respectively, and $ 79.2 million and $ 76.1 million for the six months ended July 31, 2026 and 2025, respectively. Goodwill There were no changes to the carrying value of goodwill during the six months ended July 31, 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 six months ended July 31, 2026, the Company prepaid $ 26.9 million under its credit agreement. There were no other material changes during the six months ended July 31, 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 -12- Table of Contents 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 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) July 31, 2026 January 31, 2026 4.50 % Senior Notes due 2029 $ 600,000 $ 600,000 Revolving Credit Facility 335,000 361,875 Principal amount 935,000 961,875 Less: unamortized discount and issuance costs (1) 3,938 4,496 Total debt, net 931,062 957,379 Less: current portion of long-term debt — — Long-term debt, net $ 931,062 $ 957,379 (1) In addition to the $ 3.9 million and $ 4.5 million of unamortized discount and issuance costs related to the Notes as of July 31, 2026 and January 31, 2026, respectively, $ 5.1 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 July 31, 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. Accrued interest on the Notes was $ 9.0 million at each of July 31, 2026 and January 31, 2026, 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. -13- Table of Contents 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 July 31, 2026, the interest rate on the Revolving Credit Facility was 5.08 %. 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 July 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. 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 -14- Table of Contents 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. Three months ended July 31, Six months ended July 31, (in thousands, except percentages) 2026 2025 2026 2025 Income tax provision $ 22,221 $ 18,194 $ 45,216 $ 35,232 Effective income tax rate 25.3 % 23.3 % 25.1 % 23.6 % For the three and six months ended July 31, 2026, discrete tax items impacting the effective tax rate were primarily due to tax benefit from stock-based compensation expense. For the three and six months ended July 31, 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 July 31, 2026 and January 31, 2026, the Company’s total gross unrecognized tax benefit was $ 29.6 million and $ 27.4 million, respectively. If recognized, $ 26.1 million of the total gross unrecognized tax benefit would affect the Company's effective tax rate as of July 31, 2026. 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 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 July 31, Six months ended July 31, (in thousands) 2026 2025 2026 2025 Cost of revenue $ 2,713 $ 3,114 $ 5,500 $ 6,501 Sales and marketing 3,229 1,529 7,753 6,399 Technology and development 6,178 5,732 10,131 11,652 General and administrative 10,090 8,693 18,232 8,852 Total stock-based compensation expense $ 22,210 $ 19,068 $ 41,616 $ 33,404 Stock award plans Incentive Plan. The Amended and Restated 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 July 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 4.2 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 ( 23 ) $ 24.36 - 47.21 $ 30.62 Outstanding as of July 31, 2026 110 $ 30.57 - 73.61 $ 51.10 1.3 $ 5,432 Vested and expected to vest as of July 31, 2026 110 $ 51.10 1.3 $ 5,432 Exercisable as of July 31, 2026 110 $ 51.10 1.3 $ 5,432 -15- Table of Contents 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 1,373 87.84 Vested ( 607 ) 77.14 Forfeited ( 166 ) 89.54 Outstanding as of July 31, 2026 2,768 $ 87.19 Performance restricted stock units. During the six months ended July 31, 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. In addition, during the six months ended July 31, 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 six months ended July 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. 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 and May 2026, the board of directors increased the common stock repurchase authorization by $ 300 million and $ 1.0 billion, respectively. 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 and six months ended July 31, 2026: Three months ended July 31, 2026 Six months ended July 31, 2026 (in thousands) Shares Amount Shares Amount Common stock repurchases (1) 1,206 $ 108,136 2,728 $ 231,134 (1) Shares repurchased include unsettled repurchases as of July 31, 2026. Transaction fees and excise tax were recorded as part of the repurchase price. -16- Table of Contents 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 July 31, 2026, $ 948.4 million of common stock remained authorized for repurchase under the common stock repurchase program. Accumulated other comprehensive loss As of July 31, 2026 and January 31, 2026, accumulated other comprehensive income or loss ("AOCI") consisted of unrealized losses on cash flow hedges, net. The following tables summarize the changes in AOCI during the three and six months ended July 31, 2026: (in thousands) Change in unrealized losses on cash flow hedges Tax effect Total April 30, 2026 $ ( 42,069 ) $ 10,317 $ ( 31,752 ) Other comprehensive income (loss) before reclassifications ( 49,463 ) 12,141 ( 37,322 ) Amounts reclassified from AOCI 28 ( 6 ) 22 Net change in AOCI ( 49,435 ) 12,135 ( 37,300 ) July 31, 2026 $ ( 91,504 ) $ 22,452 $ ( 69,052 ) (in thousands) Change in unrealized losses on cash flow hedges Tax effect Total January 31, 2026 $ ( 7,561 ) $ 1,854 $ ( 5,707 ) Other comprehensive income (loss) before reclassifications ( 83,775 ) 20,556 ( 63,219 ) Amounts reclassified from AOCI ( 168 ) 42 ( 126 ) Net change in AOCI ( 83,943 ) 20,598 ( 63,345 ) July 31, 2026 $ ( 91,504 ) $ 22,452 $ ( 69,052 ) The following tables summarize the changes in AOCI during the three and six months ended July 31, 2025: (in thousands) Change in unrealized gains on cash flow hedges Tax effect Total April 30, 2025 $ — $ — $ — Other comprehensive income (loss) before reclassifications 273 ( 70 ) 203 Amounts reclassified from AOCI — — — Net change in AOCI 273 ( 70 ) 203 July 31, 2025 $ 273 $ ( 70 ) $ 203 (in thousands) Change in unrealized gains on cash flow hedges Tax effect Total January 31, 2025 $ — $ — $ — Other comprehensive income (loss) before reclassifications 273 ( 70 ) 203 Amounts reclassified from AOCI — — — Net change in AOCI 273 ( 70 ) 203 July 31, 2025 $ 273 $ ( 70 ) $ 203 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 August 2026 to January 2029, resulting in cash settlement for the difference between the -17- Table of Contents 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 July 31, 2026, each of the Company's derivatives was designated as a cash flow hedge. As of July 31, 2026, the weighted-average interest rate indicated by the Company's Treasury bond forwards was 3.93 %. Notional amount of derivative contracts The notional amount of the Company's derivative instruments was as follows: (in thousands, except number of instruments) July 31, 2026 January 31, 2026 Number of instruments Notional Number of instruments Notional Treasury bond forwards 23 $ 3,035,000 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. July 31, 2026 Derivative assets Derivative liabilities (in thousands) Other current assets Other assets Accrued liabilities Other long-term liabilities Treasury bond forwards $ — $ — $ ( 37,874 ) $ ( 47,324 ) 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 gains (losses) on the Company's cash flow hedges recognized in AOCI were as follows: Three months ended July 31, Six months ended July 31, (in thousands) 2026 2025 2026 2025 Treasury bond forwards $ ( 49,463 ) $ 273 $ ( 83,775 ) $ 273 Total amounts presented in the condensed consolidated statements of operations Three months ended July 31, 2026 2025 (in thousands) Custodial revenue Income tax provision Total reclassifications Custodial revenue Income tax provision Total reclassifications Treasury bond forwards Amount of losses reclassified from AOCI $ ( 28 ) $ 6 $ ( 22 ) $ — $ — $ — -18- Table of Contents Six months ended July 31, 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 $ 168 $ ( 42 ) $ 126 $ — $ — $ — As of July 31, 2026, the estimated net amount of existing losses from treasury bond forwards that is expected to be reclassified into custodial revenue within the next 12 months is $ 6.1 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 July 31, 2026, the fair value of the Notes was $ 583.0 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 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. -19- Table of Contents