Healthequity, Inc. · NASDAQ:HQY
Healthequity — Merger or Acquisition (June 2019)
19 slides from Healthequity's merger presentation, Jun 27, 2019
Slide 1: Acquisition of WageWorks
Acquisition of WageWorks June 27, 2019 Members since 2012 Members since 2018 Members since 2006 Copyright © 2019 HealthEquity, Inc. All rights reserved.
Slide 2: Safe harbor
Safe harbor This presentation contains “forward-looking statements" within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the proposed transaction between HealthEquity and WageWorks, the synergie
Slide 3: Participants
Participants Jon Kessler President & CEO, HealthEquity Steve Neeleman Founder & Vice Chairman, HealthEquity Darcy Mott Executive VP & CFO, HealthEquity 3
Slide 4: HealthEquity track record: revenue CAGR, margin, market share
HealthEquity 36% 1580 bps 5 year revenue CAGR1 Increase in adj. EBITDA margin1 20 9 Consecutive QUARTERS Consecutive YEARS Beating adj. EBITDA consensus Increase market share2 1HealthEquity data measured for fiscal years 2013 to 2019. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by t
Slide 5: Strategic and financial rationale
Strategic and financial rationale Accelerates transition to HSAs and positions HealthEquity to build on its lead Greater access Sustained growth Expanded distribution of the Driven by HSAs & custodial assets industry’s premier platform Significant synergies More scale ~$50M in annualized synergies D
Slide 6: Transaction overview
Transaction overview Purchase • $51.35 per share consideration • 100% cash offer Premium • 19% premium to April 29th closing price of $43.06 & valuation • 28% premium to the VWAP price of WageWorks shares since March 18th • Committed financing from Wells Fargo and cash on hand at signing Financing •
Slide 7: Key metrics (quarterly)
Key metrics (quarterly) HealthEquity WageWorks $205M $71M Total revenue Total adjusted 6% EBITDA* of WageWorks’ 2,000 largest customers buy its HSA 11.7M 4.8M $9.7B Total members HSA members Total custodial assets Note: Figures as of HealthEquity and WageWorks respective first quarters, unsynergized
Slide 8: Expanded employer / advisor channels
Expanded employer / advisor channels Advisors & Health 141 1 Network partners brokers plans 2/3 of employers say brokers and advisors are influential in 2 Growing to selecting an HSA partner, up 17% in three years* Direct Retirement ~12% of DC record 25% 3 sales plans keepers by assets next year Sou
Slide 9: Premier single source platform
Premier single source platform 4.8M HSAs 3.5M 1.5M 79% >50% of employers would of HealthEquity FSAs HRAs prefer to receive RFPs requested CDB administration at least one from their HSA partner* CDB product 1.1M 800K Commuter COBRA Source: Company filings 9 Source: Aite Group survey of U.S. private s
Slide 10: Large under-penetrated employer base
Large under-penetrated employer base 115Kemployer clients1 1.7-4x Revenue with full suite3 HEALTH & WEALTH 2/3 of Fortune 500 employers2 >95% Full suite opportunity4 Source: Company filings 1 Does not contemplate overlapping employers 10 2 Combined HealthEquity and WageWorks 3 Comparative revenue of
Slide 11: Greater scale for member engagement
Greater scale for member engagement HSA FSA, HRA, Commuter, COBRA 401(k) 12MTotal members1 CONFIDENT CONSUMER HEALTHY SAVER SMART SPENDER 21% of members visit monthly2 Data driven, personalized engagement right message right person right time 112 million members is combined WageWorks and HealthEquit
Slide 12: Expands addressable market
Expands addressable market 1 Devenir HSA Research Report February 27, 2019 2 Management estimate as of June 2019 12 3 See company filings 4 Bain proprietary research June 2019
Slide 13: Strategic and financial rationale
Strategic and financial rationale Accelerates transition to HSAs and positions HealthEquity to build on its lead Greater access Sustained growth Expanded distribution of the Driven by HSAs & custodial assets industry’s premier platform Significant synergies More scale ~$50M in annualized synergies D
Slide 14: Synergy opportunities
Synergy opportunities Complementary offerings are expected to unlock significant revenue and cost synergies Near-term revenue • Custodial revenue synergy opportunity of ~$27M • Interchange revenue • Operating efficiencies Significant cost synergy • Cost of revenue opportunity of ~$23M • Transaction
Slide 15: HealthEquity guidance
HealthEquity guidance Business outlook For the fiscal year ending January 31, 2020 Guidance as of: June 4, 2019* March 18, 2019 Feb 6, 2019 ($ in millions, except per share) Revenue $339 – $345 $333 – $339 $333 – $339 Non-GAAP net income** $83 – $87 $80 – $84 Non-GAAP net income $1.28 – $1.34 $1.23
Slide 16: Planning for success
Planning for success Plan Refine March: Board level Today: integration Oversight Integrate input from Launch Validate Committee established WageWorks team 2018: Direct-to-employer channel is the fastest growing HSA channel Prepare May: Established dedicated integration Research Test team: participat
Slide 17: DRAFT & FOR DISCUSSION PURPOSES ONLY
DRAFT & FOR DISCUSSION PURPOSES ONLY
Slide 18: Reconciliations
Reconciliations 18 Reconciliations is from our press release dated June 4, 2019.
Slide 19: Reconciliations
Reconciliations 19 Reconciliations is from our press release dated June 4, 2019.