HealthEquity, Inc.

Q1 2022 Earnings Conference Call


spk_0: that afternoon welcome to help equities first quarter of fiscal year twenty twenty two earnings conference call my name is richard putnam investor relations for health equity and join me today is john kessler president and ceo doctor steve neil i'm in our vice chair and founder of the company tyson murdoch the company's executive vice president and cfl and had bloomberg or executive vice president and chief operating officer before i turned the call of to john i have to important reminders first a press release announcing our financial results for the first quarter of fiscal year twenty twenty two was issued after the market quote this afternoon the metrics reported in that press release include contributions from are wholly owned subsidiary wage works and accounts it administers the press release also includes definition of certain non gap financial measures that we will reference to date a copy of today's press release including reconciliation for these non gaap net years with comparable gap measures and a recording of this webcast can be found on our investor relations web site which is i r dot help equity dot com second or comments and responses to your question today reflect management's view as of today june seventh twenty twenty one and will contain forward looking statements as defined by the fcc including predictions expectations estimates are 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 the forward looking statements are subject to risk and uncertainty that may cause the actual results to differ materially from statements made here today as a result we caution you against placing undue reliance on the forward looking statements and we also encourage you to review the discussion of these factors and other risks that may affect our feet result or the market price of our stock detailed than or latest annual report on torn ten k and subsequent periodic reports filed with the a see we assume no obligation to revise or update the sword looking statements in light of new information or future events at the conclusion of are prepared remarks we will turn the call over to the operator to provide instructions and to host or q in a while now turn the mike over to our ceo john kessler
spk_1: thank you richard well done ll everyone and thank you for joining us on this some like brisk very late spring afternoon today we are announcing strong results for health equities fiscal first quarter of fiscal your twenty twenty two which and him on april thirtieth and we are also raising guidance for the full twinkling to fiscal year i will discuss our key lime results and acquisition activity during the quarter cat will review operations and progress on wage works integration and tyson will review the financial details of the quarter and provide detail on are updated guidance for fiscal twenty two based on the results that we are reporting today steve neeleman is here and i will join in on the qnx looking first to the by key metrics that drive our business and that we've been reporting on for a long time help equity benefited from the initial economic reopening trends that helped drive your over year growth in a to say members and and assets wow commuter and yield headwinds continue to impact total accounts and ready when you one hundred and eighty four point two million fell three percent versus the largely pre pandemic first quarter of last year now is due to lower year over year is still you yields and commuter revenue which were partially offset by a to say member growth asset growth and other see me grow up adjusted ebitda a fifty nine point zero million was similarly down from the first quarter last year at sixty three million total accounts ended the corporate twelve point eight million which does not include the nearly seven hundred thousand and commuter accounts that remain in suspense oh to say members at borders and reached five point eight million up nine percent year over year he and hsh a assets at quarters and reached a record fifteen billion up an even larger thirty one percent from year ago that's a lot of percent as ted will be tell team purple started fiscal twenty two with very promising sales results including a fiscal first quarter record of one hundred and fifteen thousand new eight essays up eleven percent from hundred and four thousand you agencies opened in que one last year a to say investments grew by over seven hundred and seventy million in the quarter as members and their employers continued to contribute and invest investing a to say members group fifty one percent year over year with more of our members connecting health and well and the average balance of hs a members grew and incredible twenty percent year over year and even four percent sequentially from the fiscal year and despite a restart of standing that addition to the strong organic resulting que one health equity reached agreements to put roughly six hundred million to work writhing additional growth this year and for years to come through the acquisitions of gloom a further and a fifth third banks hs a portfolio loom is supporting the post pandemic of outlet outside want to talk little buddy to this loomis supporting the post pandemic reboot of our commuter benefits helping clients law lunch hybrid workplace strategies as offices we open longer term we think that loom and commuter benefits and general will really be the tools clients use to shrink employee commuting carbon footprint further and fifth third will enhance health equity market leadership and scale in our core and growing a to say business adding approximately zero point seven million hs hsh and to more than two billion of custodial assets upon their respective closings later this year these figures are of course not included in the numbers that we report it to get further will strengthen the network partner strategy that it's helped fuel help equities hs a growth from it's very beginning with significant new partners increase commitment to the bluecross blueshield system and new a p i based clap capabilities to support flexible branding and deeper integration of health equity into our
spk_2: partners offerings
spk_1: it will also add the better health equities tell a solution for clients partners and members the first quarter in addition to delivering very promising sales and operating results and really important long term acquisition activity delivered evidence of pandemic headwinds beginning to turn into the islands healthcare card spend weeks we pam at pandemic levels for the first time during the latter half of que one with former lagging formerly lagging categories such as medical office visits shelling strong growth new sales opportunities and rfp volume and the value of client wins all roads year over year and que la i'm in line with new a to say opening growth that we reported today bond yields rose and yolk or sleeping with her tenure track reason the ten year of vs three months bread anymore than fifty basis points during our cue one and that perhaps portends a rebound in health equities custody of in the future the fully capitalize on that trend we are expanding our roster a principal guaranteed partners let me hear to for called deposit partners to include new ensures as well as banks and credit unions increasing competition for are managed assets and choice for a to say members here to for that's a fancy work meeting and lawyers announced plans on finally leading players now plans to reopen their urban offices after labor day consistent with our assumption of a start to commute a recovery in the second half of the year so in total into one lol pandemic fact still laid on our financial performance the team delivered strong sales we committed to acquisition investments with significant long term growth benefits and it was compelling evidence of headwinds becoming tailwind to growth for fiscal twenty two and beyond with that i will turn the call over to ten to review operations and integration had
spk_2: thanks john good afternoon everybody is john mentioned are selling see them is off to a great start first quarter new htc sales were up eleven percent year over year and twenty nine percent of earth for the first quarter of fiscal two thousand and twenty we're seeing evidence that business opportunities or return earning and that the stalled and byford deals from last year are coming back to the market are of peace which only represent a portion of our pipeline or up thirteen percent year over year with bundled are keys meaning more than one product of fifteen percent year over year in the small and medium sized market or sales opportunities or up even more owing both our marketing efforts and a strong relationships we have with our distribution partners cross l activities also continue to bear fruit and thirty enterprise partners have agreed to add new services by one one twenty two so far this year and thirteen partners a distribution partner had added new health equity services to their shelf on the integration front we have a lot going on the team completed another for platform migrations and que one and we are on track to complete the migrations and decommission work connected to the way towards platforms by the middle of fiscal two thousand and twenty three which is ahead of schedule despite or recently announced acquisition are an execution on the cobra such both of which leverage many of the same challenge a team numbers while we have migrated seventeen of the largest platforms and realized sixty five million dollars a synergies to date there remain a number of small and midsize migrations to complete to realize the remaining fifteen million of the eighty million dollars and prominent run rate synergies promised as john mentioned we are well positioned to become the leading a to say provider once the further and fists er the old are close planning efforts are underway to achieve fifteen million dollars in costs and revenue synergies within three years of clothes on the further at a transaction and we believe likely more as after that as he fully integrate our technology platform additionally are cross selling pipeline with loom is beginning to fill with promising opportunity last but not least is a huge shout out to the entire organization for the tireless efforts required to execute against the recent cover subsidy regulations it takes our entire village to support this effort and partner with clients to deliver this subsidy to those that are eligible
spk_3: there are still much to do but we have started fiscal twenty twenty two quickly and on the right foot thanks to the continued efforts of key purple
spk_2: now i'll turn it over to tyson to review our financial results
spk_4: thank you ted i will review our first quarter gap and knocked doubt financial results are reconciliation of gap measures to non gaap measures is found in today's press release first quarter revenue decline three percent of the economic effects of the pandemic impacted service revenue service and he declined eight percent to one hundred and two point five million representing fifty six percent of total revenue in the quarter the decrease is primarily attributable to and over sixty percent decrease in active commuter accounts or the growth in a to say
spk_2: a and other bees help average accounts increase one percent year over year
spk_4: custodial revenue grew slightly to forty seven million in the first quarter compared to forty six point nine million in the prior year first quarter as ninety percent growth and average age of a cast with yelled and ninety one percent growth and averages your fanbase months with the old more than after thirty three places point decline in the any like feel on age of a cash
spk_2: the annualized interstate yield was one hundred and seventy nine basis points on a just a cash with field during the first quarter of this year the shield is a blended rate for all ages they cast with field during the quarter the a of say off the table of today's press release provide additional details
spk_4: interchange revenue grew nine percent to thirty four point seven million representing ninety percent of total revenue in the quarter the interchange revenue increases primarily due to a rebound and spend across our platforms in the quarter and growth and average total accounts gross profit was one hundred and three point one million compared to one hundred and eight point one million in the first quarter of last year gross margin was fifty six percent in the quarter operating offense that expenses were ninety eight point nine million or fifty four percent of revenue including amortization of acquired tangible assets and merger integration expenses which together represented sixteen percent of revenue income from operations was four point three million compared to fifteen point one million in the prior quarter net loss for the quarter was two point six million or a lot of three cents per share on a gap ppf faces compared the net income of one point eight million or three cents per share in the prior year are non gaap net income was thirty one million for the first quarter this year up from thirty point eight million a year ago non gaap net income per share was thirty eight cents per share compared to forty three cents per share last year adjusted even for the quarter decrease six percent to fifty nine million dollars and adjusted ebitda margin was thirty two percent while operating to the impact of kobe
spk_2: turning to the balance sheet as of april thirtieth two thousand twenty one we have seven hundred and thirty seven million dollars cash and cash equivalents with nine hundred and seventy two million of debt outstanding net additions costs with no outstanding amounts drawn on our line of credit the cash balance of course will still include that as don't lose the funding required to close the further and stuff there
spk_4: it's a say acquisitions based on where we ended the first quarter and our current view the economic environment we are providing the following guidance for fiscal twenty two
spk_2: revenue for fiscal twenty two to range between seven fifty five and seven hundred and sixty five million dollars non gaap net income to be between one hundred and twenty two and one hundred and twenty six million dollars resulting in non gaap deluded net income between a dollar forty five and a dollar fifty per share based upon estimate been estimated
spk_4: a for a million shares outstanding for the year and adjusted ebitda to be between two hundred and forty one and two hundred and forty seven million dollars today's guidance includes or most recent estimate of service custodial storyline interchange revenue based on results today since we have not yet closed on the acquisitions guidance does not include potential revenue from further or from the a of face from fifth or bank as john indicated earlier we anticipate close the on both those acquisitions later this year our guide to seem to yield nhs they cast with the old of approximately one hundred and seventy five basis points as with all of today's guidance or yield guidance does not back to the pending further a fifth third it's a they acquisitions including transition of age of they cash and shirt assets to help equity principal guaranteed partners at and prevailing rates he also continued be conservative with our commuter estimates and anticipate some accounts to reactivate in the latter half of the year due to return to work guidance author contemplates estimated revenue from cobra subsidy efforts and the effect of run rate synergies from wage were expect had discussed yeah look for kids with twenty two assumes that protective statutory income tax rate of approximately twenty five percent and a diluted share count of eighty four million as we have done in recent reporting period are for your guidance include the detailed reconciliation of gap to the non doubt metrics provided in the earnings release and a definition of all such items included at the end of the earnings release in addition while the amortization of acquired intangible assets as being excluded from non death and income the revenue generated from those acquired and can't laugh it is not excluded without altering the call back over to john for some closing remarks thanks
spk_1: thanks everybody thanks tyson nicely done in instead so typically at this point in the proceedings i think those responsible for the promising and start to the year and that's cripple team members today i also like to give thanks or something else which is the resiliency up teammates over the past fifteen months he stayed safe families are taken care of well deserved bonuses were pay aid despite not see each other person for more than year our team became a more inclusive and more cohesive once better position to deliver on health at least full potential for our members or clients are partners and of course our shareholders this is not something meters do and in fact ah i haven't even put on long pants and fifteen months and we all know from the weekend the challenges that some leaders have a chance
spk_5: so this is something teams that
spk_2: thank you keep purple for this truly remarkable achievement with that let's open a call the questions up it
spk_6: thank you in a hurry mind as to ask a question simply press star one your telephone to withdraw your question press the pound i has key i can satisfy one to get into kill as as questions cause some greg peters with raymond james
spk_4: good afternoon everyone a thank you for your comments about pants you know how to paint a picture for sure
spk_1: i mean i i i all i'm saying is it seems like my shorts policies been justify a five mile at attention
spk_2: i got it i'm i'm in shorts right now myself self as you should i everyone in florida should be
spk_7: indeed a perfect anyways are so i guess i'd like this spend a second and and and have tyson and john and you obviously will come in as wow article that more about the service revenue component and in i know tyson you said you do you get some comments of why it was what were the pressure was but i i guess what i i'm i'm interested in is not what happened in the first quarter but what i should think about service revenue yet maybe as a percentage of total count for toll accounts or the as economy hopefully recovers in the back half the air
spk_4: should should these numbers begin to improve on a per account basis or is there some competitive pressure out there that while limit the the upside to the service revenue on a per total account basis are going certain on track i'm yeah i mean it really comes down to again the commuter combat right that's really what's impacting on
spk_7: that that service family line item and so just matters when you think about your mom and i think about your return and we're not going to happen you know what we just talked about was with the as well as our own business people coming back and that september time frame and really restoring them course we're watching very closely and and trade route we really haven't seen that read
spk_4: turn yet now but you see it in the news and you see people at a golf tournaments and fifty people everywhere for you know that that's a thats gonna that's gonna happen and so i think about that when eight when i think about a competitive side of it as cat just outlined we've we've had him we are and are having a very successful selling seasoning actually good quality metrics or that add that dialogue there just to show that and so i don't think there's anything unusual or greg what the have given our pyre conversations of course there's always the continued efforts the increase h a count and so are our pricing on that will come down in a single digit percentages every single year we don't disclose that but we certainly are competitive in maryland when folks have the right number of ask that and and and that it and were able to really underrated deal that from our overall bundling a person approach provide the right amount of revenue human profit then we'll do it and i'm and i think i think that's really the only thing that the that remains the same as far as competition
spk_1: of up and let's see if john has some other ads
spk_5: nani look i'm not sure i have anything real the add but i'll add something anyway and which is just just the thing is the commuter rebounds not gonna be a light switch
spk_8: where and and and we talk about this last quarter that that that that when when we were quizzed greg i think by you and others about you know that the that sort of up implied conservatism about our guide on the commuter rebounding that remains true
spk_2: it just it but but it has clearly happening as as you know folks are are are returning to cities and so forth and so on
spk_4: but that's really the biggest factor in in op's question okay and then my follow up question while pivot to am a day i you know you've had a busy year so far on and on you know you raised equity ah you've allowed some major transactions spanned the capital you've raised inequity equity
spk_7: oh you what's your view of the i'm in a pipeline is are gonna be another yeah should shareholders expect another arm
spk_2: a capital raise for you to find he did potential opportunities that you see developing in the marketplace or they are your hands for at the moment just processing what you already announced
spk_9: i feel like somewhere that the the and ten am and tanning of like that a thousand hedge fund managers just twitch
spk_1: i have a fatality
spk_10: have not to imply that hedge fund managers have in canada but in any of it
spk_2: ah
spk_5: i look i i i i think that the big picture here is that you're seeing increasing returned to scale in our business
spk_1: and i'm those returns are not and even we shirt and so there is going to continue to be am an activity and i think we've demonstrated that many by both that we can deliver strong returns from emanate in particular portfolio related emanate an that from the perspective of sellers that we are a department and and and the third the you know transaction is sort of an example that where am i think as votes understood a understand certainly was there was some in a discussion the public domain about about the third at all okay in working with with others but i'm yeah we have i think proven to be have a really good partner in in navigating you know that modest twists and turns but a few twists and turns and in getting as think that so
spk_11: that to me is is the key to this thing is one neocon we show that we're delivering the returns and to i'm can we show that where they partner sellers and that's that's a winning combination that we got
spk_1: i don't know what
spk_2: a deal's will be concluded in the second third or fourth quarter
spk_12: but we do even after this a card transaction we've we've that prince i print actions you know we have a little bit a powder left for those kind of things and pamphlet for those cap for all your type things and i'm we won't you hesitate to go forward if we think is wrong return for shareholder so that's kind of that's trying
spk_7: know where i'm at right
spk_13: got it thanks for answers
spk_4: extract sir
spk_6: nothing correct
spk_14: i think
spk_15: i next question concerns george hill with a tie to bank your question please mister outcome become a good guys thanks for taking the question and john i'll say it's over ninety degrees in new hampshire so uninsured shortstop
spk_2: outstanding
spk_3: ah i guess why why they are a lot more the yeah i've heard all about that
spk_1: our differently than two questions number one is on the selling season and i guess you see a return to normal happening fast enough that you feel comfortable about the company's ability to take share on an organic basis as we go through the selling season for twenty twenty two starts and party of my question is i don't know if you have the ability to have interactions with the coast
spk_2: mers of either further or fifth third i'll be talking about maybe that dollar retention and that client retention would love to hear your thoughts that
spk_3: yeah i'm ted why don't you start and then the can provide some color around what we're seeing in the cell cycle and up you beyond beyond the statistics offered earlier an i'm can i think you're in a great position i'll add something if it's valuable to talk about
spk_2: but those the further clients and since some have collectively we've talked most of them yeah sure i'm a i'm having a kick it off and then turn it back you to gentleman's ads and color commentary so i think on the on the first part your question george on the sales
spk_1: know sales cycle we are i'm cautiously optimistic our sales representatives are busy the quality of the finals meetings that were holding our high heels that they disappear last year are coming back to the market or relationships with partners
spk_2: are developing but your other three of you eat covered as long as you know if we don't really know how to sales cycles gonna turn out until until january of two of twenty twenty two and so all the inputs and all the top of the final stuff and all the activity level are you know are aware we wanna be the and we feel really well positioned out of the marketplace in in in those conversations before i turned over to steven and john another to take a quick shot at the the the second party or question which is the further and fifth third client base is we did you were analytical types we did a fair amount of market research in preparation for these acquisitions especially the larger one further and further as tremendous reputation marked with their clients like working with them the distribution partners like working with them is one thing that attracted us so much to the asset
spk_3: and so we have high hopes for plane and partner retention arm on both sides of the coin i i personally ah as the john sat in on no significant portion of both client and and and distribution partner calls and really pleased let me for
spk_0: heard and ah and so you don't you think we have a you tube in the further team a great team is delivered great high quality service their clients for a long time and and so we're pretty bullish about the retention prospects and you know but not as a lot of work to be non and and wood shop so i'll turn it over now to to join his teeth as color
spk_2: steve that yeah a yours are getting your voice your i would just kind of tag team awful with had said i think what we've noticed this year is just the town is different in these meetings right you rather than people with your her on fire and for i'll get people out of out of the office know that and yeah
spk_3: just really a lot of distraction you're just as a lot better focus and people are making choices and in all i wanna win em all but that i sometimes felt leaders will says better almost the get it you know know we're gonna different direction than our put me on hold for another year because carry such a clock and and were pretty coffee
spk_0: nothing when people even if they they don't you tell that we're going to use as at some point and i think we've just seen a lot more of this positive intent to make choices move ahead
spk_2: we'll continue the to offer health savings accounts another see these to their membership ace and so we just feel that as as as kind of the proverbial tell and whereas last year was adamant that people were just distracted we had a lot of no decisions last year and a lot of finals means that you could tell that we weren't the top of their their your mind when you're meeting with and so were encouraged and in our love being on on all these calls and meetings and them as to do with our games
spk_1: haven't thrown out at all that is is in terms of yeah i think those questions fact those answers effectively address the question around market share growth of if i then served target market growth i'm one of the items that had talked about in in is prepared remarks is that the growth is the growth that we have seen in lead flow around the smb and and and
spk_16: midsize markets and that is to significant and and it's it's several for what it was laughter and that's in part due to the efforts that the team is made to sort of build the muscle around direct selling as well as the muscle around marketing and regeneration on the be to be side
spk_1: into small mid sized you now that we have a product itself up an so so that's true but it also perhaps reflects some he a genuine growth in that area the market which we really want to see for the market to can the market as a whole to outperform here so
spk_17: again it consistent with that with the earlier comments i i think george the answer is that that it's it's only one quarter but but it's a quarter that both in terms of the actual accounts turned in relative to what i'm of other competitors reports of what as well as
spk_6: height whiny data is quite possible
spk_18: forget the jump like if thank you sir next question his son david larson with be t i d your question please
spk_1: david hi hey congratulations on a i could quarter and a good start of the year here i'm can top you can really talk a little bit more about your expectations for a custodial revenue it seems to me like ah the yield environment is coming in right in line with where you thought it would just any arm you know thoughts around where that might trend going forward as been talk about you know rising inflation a potential for the federation interest rates anymore color on that we very helpful thanks so much sure i'm lenny saying in the short term it is important to note that that are guide for the year as one seventy five on on the still yields and remains one step back and ah on that it's despite turning in one seventy nine with the respected bash or with op and you want and and as as i believe it was and pay with darcy comet the last quarter
spk_2: yeah we did expected that you will come down a bit over the course of the year as as we have multi year agreement that will roll over as are part of our ladder
spk_1: so you know that that that they yield headline broadly is is still with us that having them said i do think there are a number of things both that we're doing in that that are happening out in the marketplace of or the economic environment they're promising be clearly the fact that said that if it's not yeah i think i think we we all kinda look at maybe the last ten days or whatever are feeling is but we've now gone through both our full fiscal first quarter million in the period since where
spk_2: medium and longer term yoga or sustaining i'm at at at substantially higher level fifty said he basis points higher than they were
spk_19: ah let's say six months ago and additionally in a while while bank deposits facing will always lag all of that and should
spk_20: nonetheless over the long term those things tend to fall in the same pattern
spk_1: i'm and and so so that encouraging and then internally as i are they offered in the comments and tyson and mention a swell up where
spk_2: hitting some steps to assure that the assets that we manage that are guaranteed are i are are competed for vigorously in even more so than in the past which has always been a strength for company it's always been something that we try to do well both for ourselves yearn for a numbers and clients and helps us keep these competitive
spk_1: all that stuff
spk_2: and
spk_1: and we're going to be more that and so that's another thing that that know as that that heiner had when turned and us to a into a colon that that you know our goal is to build the biggest possible sale to catch it and i don't think that will have it and effect this year if anything again over the course of the remainder of this year our expectation is that that the guidance and prices that yields will still be coming down and but i think you know over the long term of the business
spk_18: this seems like have a pretty good thing and and i should say lastly that that you know having a kind of weathered this a up period of ultra low yields were weathering i should say whether whether rings period of a little low yields and yelp kind of borrowing from seeds experience in the airline business and ah and using that are using that period to really right side business and make the cost decisions we need to make and be of
spk_1: fn and and and also continued to build the platform and support right that that all pays even bigger dividends when you see those you'll come back so of were looking forward to the the your the point where weekend while he isn't here yet we're looking forward to the point where we can all seem like were real smart then but it'll be because of the actions taken thanks so much on it seems like this might be sort of a a floor for yields would you generally agree with that one fiscal
spk_21: fiscal twenty three she probably have higher yields would you agree with are generally speaking
spk_2: i i uh what we've said elsewhere is and and i actually we weren't were definitely not the business of giving a fiscal twenty three guidance on anything at this point you know what we'd save on that point is that that at least in terms of cash that
spk_22: the scope we're we're still placing contract at less than they are rolling over to
spk_18: so the implication is that know and and and fiscal twenty three would be the third year of that active and so the implication is that that were
spk_23: you know that i don't think i'm in a position to say up you know with i'm not calling it newcastle a bottom on this
spk_6: but the but
spk_24: or rushed and probably that's all i should say because i don't i don't feel like we should be out there will provide twenty three guidance as soon as we can i mean but the but that's about it tyson anything out on that point now you got it thanks are much from that and a good quarter
spk_25: like get it
spk_1: next question consume donald hooker with keybank your question please
spk_26: our great i'm good afternoon or i was curious come he added love the here john your your thoughts are we do with one thing that stuck out to me on a further acquisition what sort of the the ability to private label and i was trying to make heads or tails of that is that is it something that significantly talk about like why
spk_2: why one would want to private label i think and you tried that the past and it wasn't the it or something unique about what furthers doing that that makes said tell him have more interesting of
spk_1: now thank you for asking about this done i think what you see is is it's it's interesting and you haven't been around our market for a very very long time our goal is to be woot to meet our partners were they are with regard to how we distribute when we're just getting to upper yeah and
spk_27: yeah there are
spk_1: the there's you know there are times when partners are very interested in you know kind of embedding the product more deeply and then there are times when they're more interested in conveying independence and we are those things kind of come and go for each carton at help equity we have primarily not been a a a shop that were using private label but let's let's understand it's a little more broad than that it's really about about the the depth that which we can embed the product into the services of our partners right you know we have that that has not been are thing you gotta choose what you're gonna do you know and so what and and there are certain elements that will probably never be our thing we don't we don't sell software we sell service that software enables that kind of thing but but what further has done and what a through the the of magic of a the eyes we will be doing together
spk_2: is
spk_1: i shouldn't say the magic of it as it's not magic bullets sometimes you know it's like ball bearings followed the i
spk_28: and i think that that what what it really gives us the opportunity to do as we migrate is to meet partners where they are and sometimes partners wanna do more you know kind of embedding of a product label or otherwise and sometimes what and i i just think that's a great opportunity the primary place that the
spk_7: as has been utilized as an alpine segment right where you using some point make round trips on this of partners nick round trips on this topic but i think there's opportunity costs what we did were you know we can leverage the best of what we do as well as our our partner he goes well as you're doing more than one plus one next to with our partners and so i guess i i see this is useful from a technology perceptive useful certainly competitively to the extent that it's something we couldn't offer there are apps and
spk_0: we partners or that we would love to have partnered with us but we just haven't had this capability and we want to be wherever in ha so that's that's kind of the idea is is and you know sometimes been reverend h say me is means we're we brought on you know we'll death on the cd besides so we could deal with clients want to buy a total
spk_2: solution you know and and then sometimes it means partnering different ways and then sometimes as your it means being able to be a offer whatever level of solution or partners one at the point that they want it to help drive our strategy but also their said
spk_1: i write a new may be eaten you guys even make one call it just merkel quick a since you didn't even among health plans it be some segments they want to have it more completely branding great point of the health plan was like a a large employers can you say they don't really want that they may have multiple help finance she doesn't make sense to have a health and brand on the eight
spk_2: you say i consider the solution where is going to give him small businesses and individuals media makes more sense of the jump point this is creates other more flexibility as we partner is opens some the johnson what i wanted to intriguing hominem a be real quick and you give us a quick update on your perspective on the employment picture at your years i think my share you're worried about unemployment games like things are raging back is or tell when here for you guys what's in your guidance
spk_1: yeah i'm i think i'm your guy simply reflects that the broad nacco consensus i mean i'm ah what i would say is that that that yeah just now this is just need putting on my i'm
spk_2: a deal very ill fitting that rock on that
spk_1: i think you know the unemployment rate is declining faster than me employment market is healed and the source of that is to pull one is you have workers that are never going to be on i'm and and that seems pretty clear on the data and work or they will reenter very slowly whenever it is that they absolutely have to or they try something else or whatever but but there's probably you know three million workers that that will never or at least have there's a good chance they will never return to the workforce and that's why
spk_24: why the unemployment rate is is declining faster than jobs around
spk_29: and then secondly of there has been some real this location in certain industries that's
spk_6: that's that that's up with you know with that's that's that's real ones who takes time to kill so i i i guess my point would be we are actually following the map a consensus and this is this item absolutely no one factor that should help the the underlying market heal and if we can take the kind of share this year that we took last
spk_30: year with a with a a heel market that would be absolutely fantastic but but it's also worth noting i think just that that the headline does he tell the full story we are still not back at the level of jobs that we had prepared damage and and we're still probably five six million short about so there's still some wood shop and it's gonna gains are going to be hard to get money
spk_4: i think a your perspective
spk_31: picked up
spk_32: spend next question or conference stephanie davies with as dv leerink
spk_4: hey dad a veteran the quarter and the transaction and count me and i'm team for as well it it's very i am quit her walk me through the it change your guidance and how we should we think about lose impact to it and how much of that with off that by yields vs service revenue that you guys are making turbulent meter computer maybe something else some other bucket a conservative them
spk_2: i see
spk_4: for tie yeah i yeah
spk_30: it doesn't have any idea
spk_4: he got me in ah thanks for the question of you i think about the rays on guidance of really think about yeah we had a he had a reasonable quarter coming out of out of que en that was good at was still a pandemic quarter obviously see still have that the issues with commuter you still have you know you have spend coming back and and so that the positive thing you die at the theater sounds rolling off based on some of the timing and the legislation pushing those out of some that and goes away and then you got the cobra in there so it's really a balance among all those all those different items to really push that guidance up a little bit and so we thought that a comeback aware of you know right now we think that we're gonna be
spk_33: and and there's lots be learned over the course of the remainder of the year about how the other business returns from out so that those are some of the things that i'm taking into account as i think about it
spk_34: and know john together an internet
spk_6: nope
spk_35: right then thinking about those pockets of outside that you could have out of the the dollar the blind to the kobe did was on a pot early incomes are seeing on the weekend policy change on the embarrassment
spk_2: yeah i know there were particularly busy even so we did actually mean that the team as as ted outline made significant efforts to get in front of our clients customers to help them be within the regulations and started to i get get up commitments for the notification efforts that needed to occur and give those out and certainly
spk_7: wow we will generate revenue during que to namely getting nose out and then you'll see the after effect that and that and potentially the people who actually of cobra ah but there there has been a significant for majesty because you see the revenue them will come in and cute you
spk_8: not necessarily going to give amounted some of that you know in their and missile guidance and some of that now in this sat in the uptick a guidance here as well
spk_1: and then bank it out
spk_2: back decades
spk_1: thank you i next question concerns sean dodge with rbc capital markets a site
spk_8: hi good afternoon unarmed maybe go back the acquisition that the fifth third age as a so hundred forty nine thousand accounts holding four hundred thirty seven million that it's of are there any other details even share the dogs understand the potential incremental revenue that will add either month the account see similar to the help equity how much of that that did
spk_1: there's a cast any a difference and i be yields are those that are earning yeah i'm not a couple things and in it are some say what will
spk_2: are you either at closer next quarter whatever have gotten some point shortly thereafter we will we will will reflect this in our guidance and then know habit of and and we would sort of encourage you to saying i'm but them but all that having and said am i think
spk_1: it typically when we acquire portfolios the current count fees are lower
spk_36: ah
spk_4: then than sort of held that equity the average per account fees for next say because that's something that that they will have relied on were readily and also because in this case certainly because the out bounces higher bp if you do the math the average thousand ounces up on well over three thousand dollar so
spk_37: and then i guess
spk_4: of so so that probably one bathroom he will will will obviously place the assets and so
spk_1: ah will replace them at at and then current not prevail yields and and we'll see how that goes when it's time do it and dumb
spk_38: and then the spending a year change sides practical for our account some
spk_39: no that's that's a little bit of information i i guess fundamentally i would say on that that will will find it reflected in our guidance is seen as as he closes the challenge of doing so in advance sort of boils down to that
spk_2: we don't have caused it got it okay in and out ladies quick and i could write in topeka there's a little bit of activity revenue related to determine the medications and in the second quarter
spk_40: it would think about it the improving employment picture in the the employer coverage able to do then
spk_2: im impact your view on how many and of actually
spk_1: been in a position where they would need or opted takeover it's not that code cover up in the i'm not a lot of our the industry don't think too many people are gonna take cope
spk_2: it i think i actually it is arrogantly data are not not by
spk_4: there are not buy all of us
spk_29: ab fab
spk_41: i mean i'll take a shot at this and you look at i'd i think this is kind of one of the unknown that that has led us a year that factored into our guys the mean the yarn
spk_6: it's it's an interesting year with with more than usual number moving pieces and
spk_2: so
spk_42: you know the real answer is is we don't have none when we don't know we tried to forecastle use it and and that's what we tried to do have been terms of costs and revenues and yeah you could someone could mount that jacqui that argument say will get him minute if everyone as jobs there and and there's some truth that
spk_1: so will you and it will get one where the other this thing is not gonna you know be the be all end all of human existence or in one direction of the other the best thing about it is that some people need to get a terrible take your and and hopefully you know we have shown our clients that will work our butts off to do that whether the revenue that
spk_2: or profitability is is material not
spk_1: got it okay i that are helpful hints picture
spk_8: thank you
spk_1: i next question constant mark my coin with they hurt
spk_43: a good afternoon and that on a on a on the quarter wondering if you can talk a little bit about you know with the on you know with the increased number of deposit partners that to use on that you've talked to how should we think about that the typical premium that you're gonna get as it relates to the effective yield
spk_44: on relative to save three to five year jumbo cds as as that looking now
spk_5: yeah i mean it's a little bit hard to know mark because there's not much placement occurring right now we're in we're in a season where there's a lot talking and and the rubber meets the road a little hundred year
spk_24: but
spk_1: why i guess i will say is that that that the trick to obtaining a premium period is
spk_42: having you know at that is one haven't copter to print money into having a track record of of delivering because at the end of the day you know nothing none of these agreements are real until the money moves and and so you know that that that those are things that help us there are a lot of discussions going on with with different parties and of i i'm fortunate i think this is one of those were and and again obscene most of the impact would be in are all the impact would be in future years since since most of our placement will occur in the late in the here
spk_4: ah but the but nonetheless it's something we work pretty hard at every year and of and and certainly having more places to put that money makes us somewhat more optimistic that that we can catch as as much of the benefit of having you as there is the test on i'm interested
spk_45: i mean just don't follow up on that i mean it it does seem you did say that current placements are you know coming in an effective yield it's less than what rolling off do your are you getting the sense though that on that that bottom and is starting to move up so as we think about not enough
spk_1: this early for the full year for next year but just in terms of sequentially on that by the end of this year we're probably getting we're gonna be getting closer to the bottom in terms of the effective yield i knew that the gap is clearly narrowed in both directions lights outside the you're you're trying to ask your there been a narrowing of the other side that is the demand side and he answered yes
spk_2: okay great and then interchange really picked up nicely armed can you talk a little bit about this the sequential month we acceleration that you're seeing their because that that looks mean that's where we're really strong arm relative to expectations how can it can you talk a little bit about that
spk_1: this the place of of the rebound their i see yeah have was a real those a real bright spot know as we closed every single month we will see that things were largely normalize gif not even a little better in some cases a relative to the different places where people stand and particularly in the area of people going and getting medical procedures which was the one that was sorta lag
spk_24: and yet and the one that has no the most amount of spend the be trap
spk_46: yeah we found out that was very consistent
spk_6: we walked to the quarter and so that that that was a that was nice to see that master feel is better than what we believe unexpected expected of course the commuter interchanges clearly still not
spk_2: on the shop
spk_47: great now i would you very much as that just bad mark you're just for others i know you know this very well as we talk that many times but by the that interchange still has a seasonal component to it and so for example you know we will your first quarter we benefit from the fact that we have accounts
spk_3: that are ending in this case the from two years ago but nonetheless or ending their grace period right where he aware of where i'm ah and all that kind of thing and that we will not have in in future quarters and and i'll be reflected in both total accounts as well as interchange so so i'm i'm you know and and afford
spk_1: people have topped off their accounts at the beginning of the year and all that so
spk_48: we were certainly pleased to see it and and i think relative to are you know kind of pre pandemic levels we we kind of feel like healthcare spend his kind of back to where it was an but but that's still they're still there be some seasonality in into to and and any particular you three that that folks should be
spk_1: thinking about as the model for you great for the talking and small
spk_2: if such bar more
spk_1: thank you i next question comes on sunday tray pay with to us securities
spk_49: ah thanks so much johnson to bring it up the eighties sounds like there maybe effects are valid stuck in the cast in the computer benefits
spk_1: a plethora he fell lot lot of my question to than half of maybe you're following up on that of the comment about the yeah that the stronger stand on the dinners for the first time in a while we actually saw the the cash per account was down sequentially been building is that just because we're starting to see some stand ah a lovely thoughts on how you see you know that that interchange of if the interchange revenues go on arch of we make sure were being taken the off at it added some of that money can be coming out cash balances yeah i'm a it's a really important voice any thank you for me
spk_8: yet
spk_1: with what we're we're thrilled with the aggregate else will just thrilled and i'm thrilled that that is a function of not just market growth primarily my growth but but but but also out growth meeting meaning net asset value growth but but also of people continuing to put more into the account than they're taking out and and pick the case could certainly have been made that we would see in this quarter
spk_50: ah no
spk_1: some south downs decline as people sort of began to spend again we see that so i think what's with the biggest thing that happened is is just the continued move towards that end up as we talked about many many many many times know while that have paid off in terms of individual dollars at and found his core it also you know has the effect of people tending to put more money and and stick around and know that money grows faster and so forth but you know in the aggregate so i'm that's good for the business and i i kind of related to to a little bit too predictions about the long term sport for the the for this the sector as a whole to achieve it's full potential
spk_51: more people have to be lucky be soccer recounts and
spk_52: oh that's going be me best dancers were quick recap dances and and so so see at this level and this or even informal we still have been a substantial increases fan
spk_6: on our on a on a sequential basis things are good
spk_53: got it
spk_7: i but i did nothing but it is not as you say it is something that that you know we all have to factor in its are we we have tried to factor into i think about times before
spk_24: okay great while actually gonna fall up so i'll try to keep the called on our
spk_54: i don't know what i'm sure handed one shot
spk_4: yeah i'm wearing shorts mark on it are only maybe not short guy and navy media and mean maybe peters peter ninety one shorts
spk_55: even though he settings where choice
spk_2: it
spk_4: i forgot and we went or at
spk_56: kitten we have our last questioning que a gentleman island lot with a bank of america your question please
spk_6: as to what
spk_1: hey thanks for taking the questions and gone back to the service revenue i guess you know we that the commuter segments causing a big impact their that historically you look at fiscal twenty nineteen or twenty twenty sequentially in fiscal twenty twenty out with down slightly said he just remind us as we think about yeah
spk_6: oh there that the service line item heading into the second quarter where the fucking takes an investment community

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