Healthequity, Inc. · NASDAQ:HQY
Healthequity — Investor Day (February 2024)
78 slides from Healthequity's investor day presentation, February 2024
Slide 1: Copyright © 2024 HealthEquity, Inc. All rights reserved. | HealthEquity does not provide legal,
Copyright © 2024 HealthEquity, Inc. All rights reserved. | HealthEquity does not provide legal, tax or financial advice.
Slide 2: Safe harbor
Safe harbor This presentation does not constitute an offer or invitation for the sale or purchase of securities and has been prepared solely for informational purposes. This presentation includes a summary of certain information contained in our public filings filed with the Securities and Exchange
Slide 3: Jon Kessler, President and CEO
Jon Kessler President and CEO 15 years at HealthEquity I’m proud to be at HealthEquity because... … of the mission. I’ve always found that empowered people get better results. And in healthcare, “results” = saving and improving lives. 3
Slide 4: FY24 results
FY24 results 8.7M HSAs +9%YoY $25.2B 15.7M HSA assets +14%YoY Total accounts +5%YoY HealthEquity HealthEquity key metrics for fiscal year ending January 31, 2024. Client Advisory Board 4 September 2023 4
Slide 5: Our continued commitment to communicate multi-year targets
Our continued commitment to communicate multi-year targets 2014 2016 2019 2024 20%+ Double digit Outpace 3-year target revenue growth revenue growth the market and gain market share Double 35%+ Bottom line growth non-GAAP net adj. EBITDA growth to outpace top line income per share growth Outpace ind
Slide 6: We save and improve lives by empowering healthcare consumers
We save and improve lives by empowering healthcare consumers Lian Family Our Mission HealthEquity Members 66
Slide 7: Today's agenda
Today’s 01 Consumer-Directed Benefits Market 02 HealthEquity Strategy agenda ▪ Deepen Partnerships ▪ Deliver Remarkable Experiences ▪ Drive Member Outcomes 03 Financial Performance 04 Q&A 7
Slide 8: Tia Padia
Tia Padia EVP and Chief Marketing Officer 2.5 years at HealthEquity I’m proud to be at HealthEquity because… …we can help every family improve financial security, regardless of their economic situation. 8
Slide 9: Leading the growth of health savings
Total HSA assets HQY HSA assets Leading the growth of health savings… 2010 Present Future Total HSAs ~6 million ~35 million ~50 million ~$10B assets; ~$120B assets; ~$300B assets; Total HSA assets 9% invested 36% invested 50%+ invested Total HSA + CDB revenue ~$2 billion ~$5 billion+ ~$10 billion+ H
Slide 10: Sales results
Sales results FY24 ~33% Market Capture 949K 708K 14% New HSAs Net Growth HSA Asset Growth YoY1 HealthEquity key metrics for fiscal year ending January 31, 2024, except market HealthEquity capture which is based on Devenir Mid-year report for June 30, 2023. All Hands Meeting 10 September 2023 10
Slide 11: Deepen Partnerships, Deliver Remarkable Experiences, Drive Member Outcomes
Deliver Drive Deepen Remarkable Member Partnerships Experiences Outcomes Strengthening our integrated ecosystem so A friction-free, digital-first consumer Empowering members to make better health that we can go to market faster and more experience that supports real-time decision and financial decis
Slide 12: Deepening Partnerships
Deepening Partnerships Strengthening our integrated ecosystem so that we can go to market faster and more effectively – together New logo win rates Account and asset growth Sales and Marketing productivity Gary HealthEquity Blues Partner Summit Copyright © 2024 HealthEquity, Inc. All rights reserved
Slide 13: Steve Lindsay
Steve Lindsay EVP of Sales and Relationship Management 18 years at HealthEquity I’m proud to be at HealthEquity because… …we don’t just administer benefits, we save and improve lives. What’s more, we do it with remarkable people. 13
Slide 14: Eli Rosner
Eli Rosner EVP and Chief Technology Officer 2 years at HealthEquity I’m excited for the future of HealthEquity because… …we’re on the cutting edge of a healthcare cost transformation. 14
Slide 15: Propels all facets of shared customer growth
Propels all facets of shared customer growth >40,000 Clients FY24 HSA sales HealthEquity from new Blues Partner Summit June 2023 partnerships Members Savings Shared customer objectives 3 out of 4 ▪ Engagement FY24 new sales with integrated ▪ Retention partnerships ▪ Growth 15
Slide 16: Trends driving partnership success
Trends driving 01 partnership More partners are outsourcing consumer- success directed benefits products HealthEquity Client Summit 2022 16
Slide 17: Trends driving partnership success
Trends driving 02 partnership Greater expectations of secure data exchange in success return for value and ease HealthEquity Client Summit 2022 17
Slide 18: Trends driving partnership success
Trends driving 03 partnership Increasing number of partners associated success with each deal HealthEquity Client Summit 2022 18
Slide 19: Partners are increasing data exchange
01 Partners More partners are are increasing outsourcing consumer- directed benefits products data exchange 02 to create Greater expectations of secure data exchange in greater value return for value and ease and improve 03 member outcomes Increasing number of partners associated with each deal Heal
Slide 20: Integrated partner network accelerates digital, leveraged distribution model
Integrated partner network accelerates digital, leveraged distribution model 70% 75% of a sale is determined before of B2B buyers prefer an entirely they ever talk to a sales person 1 rep-free experience2 1 2022 Win/Loss Report, 23 interviews, 178 survey respondents, completed 2/24/23 -3/29/23. 2 20
Slide 21: Broker portal
Broker portal 55% of our small group sales driven by brokers We’re improving our broker portal so brokers can: ▪ Self-serve information ▪ Track clients’ progress ▪ Open accounts directly HealthEquity sales metric for fiscal year ending January 31, 2024. 21 21
Slide 22: Delivering more value to our clients and members
What we’re solving for: Delivering more value to our clients and members – faster and seamlessly. 22
Slide 23: Distinguishing factors require deep trust, capital investment, and technical expertise
Distinguishing factors require deep trust, capital investment, and technical expertise 01 02 Integrate into customer Incorporate external ecosystem vs. customers innovation alongside our conforming to us own solutions HealthEquity Blues Partner Summit 23
Slide 24: Strategic investments to fuel ecosystem
Strategic investments to fuel ecosystem Product and Technology expense allocation over time 70% to 30% Investments to enable growth Sustain Strengthening our privacy and 70% data security framework 70% 30% to Establishing a unified data hub in the cloud 70% Innovate Implementing real-time, standardi
Slide 25: Service, Education, Experience partner ecosystem
Health plan partners Recordkeepers Brokers Health plan partners Point Them solution Open System Closed System Members Member Benefit Administrators Service Education Experience Providers Customers Remarkable Service Proactive Education Next Best Actions Reactive Proactive Customers Prescriptive Basi
Slide 26: Bidirectional API elevates partners' offering | BlueFit example
Bidirectional API elevates partners’ offering | BlueFit example 95% of subscribers have earned an incentive Impact ▪ Consumer-directed health plan ▪ Designed around an HSA ▪ Incentivizes health, wellness, and financial literacy HealthEquity sales metric for fiscal year ending January 31, 2024. 26
Slide 27: Bidirectional data exchange
Benefits 01 + 02 Actionable recommendations at precisely the Bidirectional Real-time right time data exchange connectivity Empowered ▪ Standard, out-of-the- ▪ Instantaneous consumers to box connectors data exchange make better ▪ Data hub health and financial decisions 27
Slide 28: Seamless integrations
01 Seamless Bidirectional data exchange integrations Payroll partner example with out-of-the-box connectors make it easy and cost efficient 70% Cost savings with connectors for clients and partners $500K+ Potential annual savings HealthEquity management estimated savings based HealthEquity on previo
Slide 29: Connectivity
Connectivity to provide recommendations 02 and insights precisely when Real-time connectivity our customers require them, within context HealthEquity Client Summit 2022 29
Slide 30: Deepening Partnerships
Deepening Partnerships Delivering greater value–to more people–faster through the power of an intelligent, connected partner ecosystem New logo win rates Account and asset growth Sales and Marketing productivity Gary HealthEquity Partner Summit Copyright © 2024 HealthEquity, Inc. All rights reserved
Slide 31: Deliver Remarkable Experiences
Deliver Remarkable Experiences A friction-free, digital-first consumer experience that supports real-time decision making Margin expansion Client retention & cross-sell Ashley HealthEquity Member Services Copyright © 2024 HealthEquity, Inc. All rights reserved. HealthEquity does not provide legal, t
Slide 32: Angelique Hill
Angelique Hill EVP of Operations 13 years at HealthEquity Five years ago, I never would have imagined… …that I’d have to find another excuse to get out of cooking (instead of commuting!) 32
Slide 33: Kamesh Tumsi
Kamesh Tumsi SVP Head of Product 1 year at HealthEquity Five years ago, I never would have imagined… …that my dog could come to work with me every day. 33
Slide 34: Service, Education, Experience
Shaylee Laronne Lian Family HealthEquity Member Services Client Advisory Board HealthEquity members Service Education Experience Business growth Mobile-first experiences Shifting consumer Real-time insights demands New technologies Self service 34
Slide 35: Reducing Member Service expense
Reducing Member Service expense Total Cost of Revenue 45% 42% 40% 40% Q1 Q2 Q3 Q4 % Cost of Rev avg HealthEquity total cost of revenue taken from quarterly averages from Q4FY19 to Q3FY24. Member Service and Service cost as a percentage of Total Cost of Revenue calculated from last four quarters Q4FY
Slide 36: Reducing Member Service expense
Reducing Member Service expense 01 Reducing staffing costs Member Service 22% Total Service Cost, Custodial including 9% 02 Member Automating high-volume Service interactions Interchange 84% 7% 03 Investing in digital experiences Service Interchange Custodial Member Service HealthEquity total cost o
Slide 37: Self-help tools
Self-help tools 01 Members using self-help through portal navigation, help center articles, and prompts Maybe just motion in the mobile and static portal screenshot here? 69% 02 Member interactions served by chats – which are moving from bot to AI bot chat 50% 03 Enhanced Rates adoption driven by se
Slide 38: Omni-channel engagement
Omni- channel engagement Mobile-first digital engagement so members have real-time insights to power their health and financial decisions — when and where they need it Watch the demo 38 38
Slide 39: Digital card
Digital card Today’s customers demand immediate access to their funds on the go—and they don’t want to be weighed down by paper and plastic 39 39
Slide 40: What's different about this offering?
01 Integrated multi-product stack What’s different about this offering? 02 Instant issuance feature 40
Slide 41: FSA open enrollment results | FY24
FSA open enrollment results | FY24 ~12% improvement in re-elect rates for clients using open enrollment education in the FY24 season Consumer Ongoing bite-sized Open enrollment research nudges education Gina HealthEquity re-election rates for fiscal year ending January 31, 2024. HealthEquity member
Slide 42: Spending FSA dollars
Spending FSA dollars 01 See FSA-eligible expenses 02 Purchase online 03 Pay with FSA funds 42 42
Slide 43: Expedited claims demo
Expedited claims demo AI-driven product enhancement automates substantiation and accelerates reimbursement 43 43
Slide 44: RA and COBRA renewal
RA and COBRA renewal Improved renewals while reducing service costs 82% 40% of reimbursement of reimbursement account account renewal renewal processing time volume occurs in reduced by fully automated 8-week window plan renewals HealthEquity data for fiscal year ending January 31, 2024. 44
Slide 45: Broker portal
Broker portal 01 Informational dashboards with segment-specific insights 01 02 Self-service for reporting requests and more 45
Slide 46: Deliver Remarkable Experiences
Deliver Remarkable Experiences A friction-free, digital-first consumer experience that supports real-time decision making Margin expansion Client retention & cross-sell Ashley HealthEquity Member Services Copyright © 2024 HealthEquity, Inc. All rights reserved. HealthEquity does not provide legal, t
Slide 47: Driving Member Outcomes
Driving Member Outcomes Empowering members to make better health and financial decisions Improving members’ health and financial outcomes Account and asset growth Client acquisition and retention Becca HealthEquity member Copyright © 2024 HealthEquity, Inc. All rights reserved. | HealthEquity does n
Slide 48: Kelly Koster
Kelly Koster Senior Director of Product Marketing and Sales Enablement 6 years at HealthEquity Five years ago, I never would have imagined… …that my teammates would get to know my cat so well. 48
Slide 49: Shuki Licht
Shuki Licht VP Head of Innovation 9 months at HealthEquity I’m excited for the future of HealthEquity because… …of the potential for strong innovation and advanced technology to take our already “Remarkable” service to a whole new level! 49
Slide 50: Driving member outcomes is about leveraging connectivity and technology
Driving member outcomes is about leveraging connectivity and technology 01 02 03 04 Enroll Contribute Maximize Improve Greater HSA-eligible Increase contributors and Grow investing Health plan enrollment drive higher contributions rates outcomes 50
Slide 51: Enjoying better outcomes and a more affordable health plan
Enjoying better outcomes and a more affordable health plan 6,800 Eligible employees Though improved plan design, this company increased HSA enrollments and contributions without putting a financial burden on their employees. San Jose, CA – $25 104% 11% Headquarters Reduced cost of health insurance I
Slide 52: The power of HSA member education
The power of HSA member education 11% New account rate1 vs 8% without open enrollment education Consumer Open enrollment Member Ongoing bite- research education onboarding sized nudges 1 New Account Rate: Number of New Accounts divided by Number of Accounts on 12/31/2023. Austin Source: HealthEquity
Slide 53: Trends: Affordable, comprehensive benefits
Trends 01 Driving our imperative to Affordable, improve member health comprehensive benefits and financial security HealthEquity Client Summit 2022 53
Slide 54: Employer insights
Employer insights 01 Informational dashboards with segment-specific insights Embed Employer Analyzer Demo 02 Recommended actions with 01 estimated impact 03 Ability to deploy actions directly within the tool 04 Post-campaign analysis and benchmarking Watch the demo 54
Slide 55: Driving member outcomes is made possible by our unique strengths
01 Power of our connected ecosystem Driving member outcomes is made 02 Size and scale of our business possible by our unique strengths 03 Investments in data security, data cloud, and API connectivity 55
Slide 56: Improving health and financial resilience
Improving health and 47% financial of Americans say it is difficult to afford healthcare costs resilience Give members the power to 1/4 of adults say that in the past 12 pay out-of-pocket months they have skipped or healthcare expenses, postponed getting healthcare they needed because of the cost in
Slide 57: R.R. Donnelley has provided $1.2 million in interest-free funds
Client Advisory Board Insight R.R. Donnelley has provided $1.2 million in interest-free funds 11,000 to employees through Health Payment Accounts Eligible employees “We asked ourselves, ‘What are all the different ways that we can make a difference for these employees from a health perspective?’ We
Slide 58: Incentivizing preventative care drives down costs
Incentivizing preventative care drives down costs Increased benefits utilization accelerates the rate of data flow through the ecosystem and drives contributions to the HSA Austin HealthEquity member 58 58
Slide 59: Trends: Intelligent spending
Trends 02 Driving our imperative to Intelligent improve member health spending and financial security HealthEquity Client Summit 2022 59
Slide 60: Demo
Demo 01 See areas of overspending 02 Find lower-cost care and provider options 03 Search by price, rating, distance 04 Click to call or schedule Watch the demo 60
Slide 61: Driving Member Outcomes
Driving Member Outcomes Empowering members to make better health and financial decisions Improving members’ health and financial outcomes Account and asset growth Client acquisition and retention Becca HealthEquity member Copyright © 2024 HealthEquity, Inc. All rights reserved. HealthEquity does not
Slide 62: Finance
Finance Setting our course to create shareholder value Driving unit sales growth Decreasing the cost of serving accounts HealthEquity All Hands Meeting Copyright © 2024 HealthEquity, Inc. All rights reserved. HealthEquity does not provide legal, tax or financial advice.
Slide 63: James Lucania
James Lucania Chief Financial Officer 6 months at HealthEquity I’m proud to be at HealthEquity because… … all 3,500 of us truly believe the combination of our leading technology stack and our Purple culture of service is empowering members to improve their health and financial wellbeing. 63
Slide 64: Danny Hurst
Danny Hurst VP and Corporate Controller 10 years at HealthEquity Five years ago, I never would have imagined… …that I’d be doing 10-Ks and audits from my couch. 64
Slide 65: Historical revenue streams
Historical revenue streams 01 02 03 Custodial Service Interchange Interest earned on custodial cash Service charges per account Fees generated by member spending on our platform Recordkeeping and investment Transaction-related fees advisory service fees Drivers Drivers Drivers • Investor accounts •
Slide 66: Income statement presentation updates
Income statement presentation updates Retrospective reclassifications to the income statement presentation for fiscal years 2022 and 2023, as well as full fiscal year 2024 in the upcoming HealthEquity fiscal year 2024 10-K. Current Updated Description classification classification Analysis Recordkee
Slide 67: Reclassification bridge | Fiscal year 2023
Reclassification bridge | Fiscal year 2023 67
Slide 68: Updated YoY comparison
HealthEquity" Updated YoY comparison Year ended January 31, (in thousands) (unaudited) 2023 2022 Revenue Service revenue $ 452,026 $ 443,608 Custodial revenue 261,282 186,119 Interchange revenue 148,440 126,829 Total revenue 861,748 756,556 Cost of revenue Service costs 318,516 291,618 Custodial cos
Slide 69: Abhinav Dendukuri
Abhinav Dendukuri VP and Corporate Treasurer 1 year at HealthEquity I’m proud to be at HealthEquity because… …we’re helping our members save for a healthier tomorrow. 69
Slide 70: HSA cash maturity schedule
HSA cash maturity schedule $15 billion total HSA Cash assets as of HSA cash custodial assets repricing in $billions $3.6 January 31, 2024 $3.5 $3.2 $14.3 billion in fixed-rate contracts $2.1 $1.9 FY25, 26, 27 maturing yields are below the current forward curve expectations for new rates expected for
Slide 71: Benefits of Enhanced Rates contracts
Benefits of Enhanced Rates contracts 01 02 03 Reduced variable Improved stability Increased average yield rate exposure of custodial yields across business cycle Enhanced rates Daily inflows and outflows ~4.5 Year repricing cycle ~T+75bps Basic rates Variable rate contracts ~2.5 Year repricing cycle
Slide 72: Accelerating Enhanced Rates adoption
Accelerating Enhanced Rates adoption ~30% 10% /yr Enhanced Rates adoption Current adoption Over the next 3 years Drivers Drivers ▪ New accounts ▪ Transfer from maturing Basic rates contracts ▪ Acquired accounts ▪ New accounts ▪ Acquired accounts HealthEquity sales metric for fiscal year ending Janua
Slide 73: Guidance | Fiscal year 2024
Guidance | Fiscal year 2024 HealthEquity fiscal year ending January 31, 2024 Guidance as of: February 21, 2024 December 5, 2023 ($ in millions, except per share) Revenue $995 - $1,000 $985 - $995 Net Income $49- $52 $34 - $39 Net income per diluted share $0.56 - $0.60 $0.39 - $0.45 Non-GAAP net inco
Slide 74: Affirming fiscal year 2025 outlook
Affirming fiscal year 2025 outlook HealthEquity fiscal year ending January 31, 2025 Outlook as of: February 21, 2024* Revenue ($ in millions) $1,140 - $1,160 Adjusted EBITDA (as a % of revenue) 38% - 39% Outlook based on HSA cash yield of approximately 3.0% *A reconciliation of our Adjusted EBITDA o
Slide 75: Our goal | FY24 – FY27: Double non-GAAP net income per share
Our goal | FY24 – FY27 Double Non-GAAP Net Income Per Share A reconciliation of our Non-GAAP Net Income Per Share goal for the fiscal year ending January 31, 2027 to net income (loss) pershare, its most directly comparable GAAP measure, is not included, because our net income (loss) per share expect
Slide 76: Key factors
Key factors ▪ Member spending behaviors ▪ Unit economics ▪ Interchange revenue HealthEquity All Hands Meeting Revenue Expansion Cost Reduction Growing Growing Increasing Unit accounts assets custodial cost 76
Slide 77: Finance
Finance Setting our course to create shareholder value Driving unit sales growth Decreasing the cost of serving accounts HealthEquity All Hands Meeting Copyright © 2024 HealthEquity, Inc. All rights reserved. HealthEquity does not provide legal, tax or financial advice.
Slide 78: HealthEquity
HealthEquity’