HealthEquity, Inc.

Good afternoon, and welcome to HealthEquity's fiscal 2021 earnings conference call, 2021 earnings conference call. My name is Richard Putnam. I do investor relations for HealthEquity. And joining me today is John Kessler, president and CEO, Dr. Steve Neelaman, vice chair and founder of the company, Darcy Mott, the company's executive vice president and CFO, Tyson Murdoch, executive vice president and deputy CFO, and Ted Bloomberg, our Executive Vice President and Chief Operating Officer. Before I turn the call over to John, I have two important reminders. First, a press release announcing our financial results was issued after the market closed this afternoon. The metrics reported in the press release include the contributions from our wholly-owned subsidiary WageWorks and accounts it administers. Press release also includes definitions of certain non-GAAP financial measures that we will reference today. A copy of today's press release including reconciliations of these non-GAAP measures and comparable GAAP measures and a recording of our webcast can be found at our investor relations website, which is ir.healthequity.com. Second, our comments and responses to your questions today reflect management's view as of today, March 15, 2021, and will contain forward-looking statements as defined by the SEC, including predictions, expectations, estimates, or other information that might be considered forward-looking. There are many important factors relating to our business which could affect the forward-looking statements made today, and these forward-looking statements are subject to risk and uncertainties that may cause our actual results to differ materially from the statements made here today. As a result, we caution you against placing undue reliance on these forward-looking statements, and we also encourage you to review the discussion of these factors and other risks that may affect our future results or the market price of our stock that are detailed in our latest annual report on Form 10-K and subsequent periodic reports filed with the SEC. We assume no obligation to revise or update these forward-looking statements in light of new information or for future events. And at the conclusion of our prepared remarks, we will turn the call over to our operator to provide instructions and to host our Q&A. I'll now turn the call over to our CEO, John Kessler.

Thank you, Richard. And in deference to my mother's favorite TV show, you are my American Idol. Hello, everyone, and thank you for joining us this afternoon. Today, we are announcing strong results for health equities fiscal fourth quarter and for the full fiscal 2021, which ended on January 31st. And we're providing guidance for fiscal 22. After briefly touching on our fiscal 21 results, I will, after I do that, Ted will review operations and touch on the recent loom acquisition. Darcy and Tyson will tag team the financial results, details of fiscal 21, and guidance for fiscal 22 based on the results we're reporting today. And Steve is here to join us for Q&A. Fiscal 21 revenue of $734 million is up 38% year over year. And along with adjusted EBITDA of $241 million is both a record due largely to our wage works acquisition last fiscal year. As reported last month, we ended FY21 with 12.8 million total accounts, and our 5.8 million health equity HSA members ended FY21 with 14.3 billion in HSA assets. We were pleased with that growth in results, but we hadn't yet seen how those compared to the market. Devonier, our scorekeeper of sorts, reported a January addendum to its 2020 year-end report, that estimates market-wide growth of 6% year-over-year in HSAs compared to our 11% organic growth and 22% market-wide HSA asset growth compared to our 26% organic HSA asset growth. Note the organic numbers exclude losses from the wage works acquisition and migration, but either way, those are good. We're beating the market, and that's what we promised to do. We continue to hold number one market share of HSAs, with 19%, and we're in second place in HSA assets at 16%. Now let's look forward. While the pandemic remains with us and could result in conditions we are not anticipating, the health equity team is committed to beating fiscal 2021 results that I've just reviewed, demonstrating the strategic value of our total solution strategy. Last month, we talked about headwinds felt in fiscal 21 that might be turning into tailwinds for fiscal 22. And Ted, in addition to touching on our sales results, which, Ted will touch on our sales results, which are an example of that, we think, so far this year. But we're also starting to see other tailwind evidence as well. For example, we've seen a reversal in bond yields, as indicated by the 10-year Treasury moving from you know, around 0.9% at the start of January this year to above 1.5% this week. While treasury yields are not directly related to yields that our depository partners provide, there's a high long-term correlation, particularly between five- and ten-year treasuries and five-year jumbo CDs. With our HSA cash assets already placed for fiscal 22, we don't expect that we'll see much of an impact for this year's yields but we think a steepening yield curve does bode well for next year and beyond. We're also seeing more opportunities in M&A, and we think we're well-positioned to opportunistically attract both portfolio acquisitions and to expand our capabilities to serve our partners, our clients, and our members. For example, we announced the acquisition of Loom last week. Loom is a SaaS-based technology company that provides a commuter solution beyond monthly passives. and that employers are looking for as they need help returning their teams to work safely. Loon's flexible platform supports tailored policy and incentives for the post-pandemic hybrid workplace and helps employers to thoughtfully approach green initiatives to reduce the carbon footprint of community. We welcome our new teammates, as Ted will say, our luminaries in Seattle, and we're excited about how they will help our partners, clients, and members return to work. And finally, from a headwinds perspective, the government passed the third stimulus bill in the last week or so that, among other benefits, provides for COBRA subsidies for six months and increases, more precisely doubles, the dependent care FSA spending limits for the 21 calendar year. Both of these provide relief to families who have been impacted by the pandemic and its effect on access to health care. and also indicate that legislators and regulators are listening when we talk about opportunities to do the right thing. I'll now turn the call over to Ted to review operations. Ted.

Thanks, John. Hello, everybody. We are very pleased with the operating results that we delivered in Q4 and for all of fiscal 21, especially given the very challenging circumstances COVID presented. We were able to make tremendous progress on integrating wage works, and we found efficiencies that allowed us to raise our synergy target from $50 million to $80 million, with 60 million of run rate synergies achieved to the end of FY21. We onshore member phone calls. We completed 13 migrations with a heavy focus on HSA. We saw that our member and client experience scores improve. We unified our brand. released the first version of our integrated platform to strong reviews on both portal and mobile and met our service-level commitments during this year's busy season. There is more work to be done, however. We're targeting another six migrations this year, along with integration work to support our newest acquisition of Loom. We intend to roll out the next iteration of our integrated platform with features that our clients, members, and partners are excited about. As I mentioned in February, our sales results year to date remain ahead of where they were last year. We believe this performance can be attributed to market receptiveness of our total solution, the work we have done building strong distribution partnerships, and the incredible work our onboarding teams did making new clients feel the purple love this December and January. We hope to see this positive trend continue as unemployment bottoms out, Americans get vaccinated, and clients and members return to work and re-engage with their benefits solutions. Speaking of returning to work, let me share a little bit about our newest teammates, or Luminaries, in Seattle. We are so excited to acquire Loom to help us drive our commuter benefit beyond monthly transit passes and help solve real back-to-work challenges for our clients. The post-COVID commute environment will look very different. with employers wanting to deliver flexible benefits and incent employee behaviors to manage tight parking solutions and make better use of alternative transit. Loom can also help companies take basic ESG steps as they have a proven track record of lowering drive-alone rates and reducing car trips. We believe in that mission, and we believe that Loom will fulfill our commitment to continuously innovate our services to meet the evolving needs of our clients large and small. We also see opportunity as legislative and regulatory relief is extended to our members and clients through the passing of a 100% COBRA subsidy that will help Americans stay covered. We will shortly roll out plans to help our clients fulfill their obligations and help our members find the coverage that is right for them. While there is a significant operational undertaking to pull this off, It is our obligation to serve our clients and members in this capacity. There is a lot going on, and I would like to say thank you to our over 3,000 teammates who are working so hard on behalf of our members, clients, and partners to deliver all the work I referenced above in purple fashion in challenging circumstances. Now I will turn it over to Darcy to talk about our results.