Healthequity, Inc. · NASDAQ:HQY
Healthequity — Investor Presentation (July 2020)
19 slides from Healthequity's investor presentation, Jul 8, 2020
Slide 1: Investor update July 7, 2020
Copyright © 2020 HealthEquity, Inc. All rights reserved. Investor update July 7, 2020 HealthEquity does not provide legal, tax or financial advice.
Slide 2: Safe harbor
Safe harbor 2 This presentation includes information contained in our public filings filed with the Securities and Exchange Commission (SEC ), which public filings are expressly incorporated herein by reference (see http://ir.healthequity.com/ ), and other publicly available information. Readers are
Slide 3: Offering summary
Offering summary 3 Issuer HealthEquity Ticker / Exchange HQY / NASDAQ Base Offering Size $250 million Over - allotment Option 15% (100% primary) Offering Structure Common Stock Use of Proceeds To free up additional capital for organic and inorganic growth by pre - paying $200 million under its term
Slide 4: Positive trends in Q2
Positive trends in Q2 4 June new sales opportunities up 16% vs April and up 22% YoY 84% of pipeline HSAs are in bundled opportunities FYTD June card spend up 16% vs April Continued HSA, Custodial Asset and CDB account growth Low attrition from BNYM migration Strong renewals including US Govt. OPM, H
Slide 5: An industry leader
An industry leader 5 HealthEquity HSAs, HSA Assets, HRAs, FSAs, Commuter, COBRA, and Other CDBs as of April 30, 2020. Integrations information and em ployer served information is as of January 31, 2020. Management estimates benefits administration for employers that employ 1 in 7 working Americans b
Slide 6: Expanding market
Expanding market 6 1 Devenir HSA Research Report as of December 31, 2019 2 Management estimate as of June 2020 3 HealthEquity information as of April 30, 2020 4 Proprietary research June 2019
Slide 7: Outpacing market growth
Outpacing market growth 7 Market data from Devenir Year - end HSA Market reports 2012 - 2019 Rank #5 #4/5 #4/5 #4/3 #2/3 #3 #2 #1/2 HealthEquity HSA market share 2014 2015 2016 2017 2018 2019 587% HQY HSA assets 444% HQY HSAs 241% Market HSA assets 165% Market HSAs By HSAs By HSA assets 8% 9% 9% 11%
Slide 8: Sales opportunities FYTD
Sales opportunities FYTD 8 Mar ’19 64% 36% Mar ’20 63% Apr ’19 57% 43% Apr ’20 47% 37% May ’19 May ’20 53% Jun ’20 52% 75% 60% 54% Jun ’19 25% Feb ’19 46% 45% 40% 55% Feb ’20 48% 53% 47% +125% - 4% - 14% - 16% +22% HSA+ CDB FYTD total opportunities YoY by month FYTD mix FY2020 FY2021 +5% CDB HSA+ *D
Slide 9: 79% Bundling FYTD
79% Bundling FYTD 9 Weighted by estimated number of accounts 84% 76% 58%
Slide 10: Card spend FYTD
Card spend FYTD 10 FYTD20 FYTD21 - 17% CDB HSA FYTD card spend FY21 mix Note: Amounts representative of the Company’s largest card provider. Is not inclusive of all the Company’s card providers. 3% - 23% - 46% - 43% - 33% 14% - 7% - 23% - 18% 3% CDB HSA Feb ’20 Mar ’20 Apr ’20 May ’20 Jun ‘20 YoY by
Slide 11: Offering benefits
Offering benefits 11 Increased capacity to acquire sub - scale HSA portfolios Acquirer of choice for small to midsized HSA portfolios from banks and CUs More exits likely with return to ultra - low interest rate policy Since 2010, 20+ HSA portfolios acquired Continued investment in proprietary platf
Slide 12: HSA portfolio acquisition
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -- 1.00% 2.00% 3.00% HSA portfolio acquisition 12 Source: CapitalIQ , Year - end Devenir and HealthEquity information as of July 6, 2020 (1) 2019 Year - end Devenir report Fed Funds Rate HSA custodian assets by industry (1) 16% 60% 24% HealthEqu
Slide 13: Capitalization and leverage
Capitalization and leverage 13 ($ in millions) April 30, 2020 As adjusted 1 April 30, 2020 January 31, 2020 Cash & cash equivalents $213 $171 $192 Long - term debt 2 $1,014 $1,214 $1,221 Total stockholders’ equity $1,283 $1,041 $1,030 Total net leverage ratio 3 2.88 3.73 3.44 1. Assumes $250 million
Slide 14: Interest savings offset earnings dilution
$171 $213 $1,214 $1,014 Q1 21 As Adjusted Q1 21 ² Interest savings offset earnings dilution 14 x Reduces debt outstanding x Lowers pricing on overall pro forma debt x Enhances liquidity and acquisition flexibility x Increases covenant cushion Borrowing costs: L + 200 L + 175 Debt outstanding 1 Cash
Slide 15: Fiscal first quarter financial results
Fiscal first quarter financial results 15 NOTE: Historic performance depicted is not necessarily indicative of past and future performance. For more information, see our Company’s public filings with the Securities and Exchange Commission (1) See reconciliation of net income, the most comparable GAA
Slide 16: First quarter HSA key metrics
First quarter HSA key metrics 16 HSAs (000s) • 104K Q1 new organic HSAs • 33% growth YoY • $3.2B net increase YoY • 38% growth YoY NOTE: HSA and HSA Asset balances as of April 30 in each year with Q1FY21 balances including the acquired HSAs and HSA assets fr om WageWorks and other in FY 2020. Histor
Slide 17: HealthEquity
HealthEquit.
Slide 18: Appendix
Appendix Heali sj
Slide 19: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation 19