HealthEquity, Inc.

Please go ahead, Mr. Putnam.

Thank you, Justin. Good afternoon. Welcome to HealthEquity's third quarter fiscal year 2022 earnings call. My name is Richard Putnam. I do investor relations here for HealthEquity. Joining me today is John Kessler, president and CEO, Dr. Steve Niebelman, our vice chair and founder of the company, Tyson Murdoch, the company's executive vice president and 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 for the third quarter of fiscal year 2022 was issued right after the market closed this afternoon. The metrics reported in the press release include the contributions from our wholly owned subsidiary, WageWorks, and the accounts that it administers. The press release also includes definition of certain non-GAAP financial measures that we will reference here today. A copy of today's press release, including reconciliations of these non-GAAP measures with comparable GAAP measures, and a recording of this webcast can be found on 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, December 6, 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. These forward-looking statements are subject to risk and uncertainties that may cause our actual results to differ materially from statements made here today. 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 future events. And at the conclusion of our prepared remarks, we will turn the call over to the operator to provide instructions and to host our Q&A. And I'll turn the call over to our CEO, John Kessler.

Thank you, Richard, and hello, everyone, and thank you for joining us. Today, we are reporting results for Health Equity's fiscal third quarter, which ended on October 31st. Core HSA sales accounts and assets continued the strong growth pattern that we have seen throughout fiscal 22, while ancillary consumer-directed benefits or CDB administration slowed and weighed on operating performance. I will dive into both aspects of Q3 results, and Tyson will review the financial details of the quarter and provide updated guidance for the full fiscal year 2022. Steve and Ted will join us as we take time for your questions. Let's start with the five key metrics that drive health equity's business. Q3 revenue of $180.0 million was up slightly from $179.4 million in the third quarter of last year. Adjusted EBITDA of $61.1 million was flat year over year. $13.3 million total accounts at quarter's end were plus 6% versus a year ago. And as in recent periods, total accounts exclude commuter accounts and suspends. HSA members at quarter's end reached $6.2 million, up 14% from a year ago, including 11% organic growth plus new HSA members from the transition of Fifth Third's portfolio just before the end of the quarter. And HSA assets at quarter's end reached $16.4 billion, up 32% from a year ago, including 28% organic growth and approximately $490 million in Fifth Third assets transitioned. Spurred by total solution and cross-sales, HSA has captured a greater share of HSA growth both during the pandemic, impacted fiscal 21 than ever before, and has now delivered record organic HSA openings and asset growth during the first three quarters of fiscal 22. Team Purple delivered a fiscal third quarter record of 151,000 new HSAs, up 45% from 104,000 new HSAs opened in Q3 of last year. Through three quarters of fiscal 22, the team has welcomed 446,000 new HSA members across its diverse sales channels. That's 41% more than in the same period in fiscal 21 and 29% more than during the same period in the pre-pandemic fiscal 20. The migration of Fifth Third Bank's HSAs added another 160,000 HSAs on top of the strong sales results. And HSA assets grew a total of nearly $1 billion during the quarter, and that includes assets, of course, transferred from Fifth Third. Investing HSA members at quarter's end were up a remarkable 43%, with 74% growth in invested assets from a year ago. Health equity members' average HSA account balance grew a robust, good word, robust, 16%. evidence that members continue to catch the vision of long-term health savings and to connect health and wealth. Health equity's organic and total year-over-year HSA and HSA asset growth in Q3 compare very favorably to the most recent industry data. Devonier estimates 6% account and 26% asset growth market-wide for the year ended June 30th. Health equity delivered 14% account and 32% asset growth year-over-year in Q3. Comparison with Q3 reports from publicly traded HSA peers tell the same story, saying that the team continues to take market share as we have done every year for more than a decade now. Our formula for doing this, as you know, is simple. It's a total HSA solution at scale, bundling the services that our clients want, proprietary technology delivering the ecosystem connectivity that our partners demand, and purple service and education that our members deserve. As you know, health equity acquired WageWorks market-leading CDB capabilities and client footprint two years ago to drive core HSA growth, and that is precisely what's happened. However, CDBs have proven more sensitive to near-term external factors than we expected. We believe that most of these factors will recede as the pandemic's effect on the economy continues to wane, But Q3 results from administration of FSAs, COBRA, and commuter accounts were particularly impacted and resulted in lower than expected interchange and service revenue, leading overall revenue down $5 to $10 million versus our expectations as implied in prior guidance. Let me speak about each of these. Interchange was the biggest surprise. Year-over-year interchange revenue grew just 8% in Q3, down from 23% growth in Q2. FSA spend on our debit cards and platform in Q3 slowed more than was anticipated from seasonal factors and the final user lose deadline for calendar 2020 and 2019 FSA. Improvement from here is going to depend on the choices of members during open enrollment and on enrollments from new sales that we've made this year. We anticipate that members who did not add to their balances for calendar 21 will do so for calendar 22, which leaves us cautiously optimistic as we head into the new fiscal year. Service fees from COBRA administration experienced a similar reversal after Q2 gains. In addition to the end of one-time revenue from administration of the federal COBRA subsidy, which we did expect and did discuss with you last quarter, COBRA uptake itself fell off more than we expected when the subsidy ended. Tight labor markets and high churn conditions led to more COBRA eligibility in those accounts, but not necessarily additional fees. Commuter accounts and fees had a small uptick sequentially for the first time since the start of the pandemic, and that is good and welcome. But with employers taking only very tentative steps towards return to office, Q3 commuter fees were still lower even than in the year-ago period. And finally, we understand our decision to walk away from certain legacy CDB administrative engagements for one-off services that our go-forward platform will not support will ultimately help streamline and simplify the business but hurt short-term service revenue nonetheless. So scaled CDB capabilities are spurring core HSA growth, which is strong in its own right. And the team looks forward to turning the page on CDB integration and the pandemic's various impacts on revenue. We're going to do that first and foremost by focusing even more on the expanding revenue generation capabilities around our fast-growing high-margin HSAs through sales execution, through portfolio M&A, and through product innovation. I already mentioned the record sales results and the transition of Fifth Third's HSA portfolio completed in Q3. After the quarter ended, we announced the closing of our acquisition of the HSA business of Further, which brings with it approximately 580,000 HSAs and $1.9 billion in HSA assets. Further, as you know, expands our HSA partnership footprint and commitment to the Blue Cross Blue Shield Association and its health plans and adds technology to help partners embed health equity more deeply into their products. In fact, you should expect to see real examples of deeper integration of health equity HSAs with partners in the coming quarters. This morning, we announced an agreement to acquire a portfolio of $1.3 billion in HSA assets from health savings administrators, a leader in marketing HSAs to individual investors and to small employers. I'm pleased to report that initial member uptake of our innovative enhanced rates offering is beating our expectations, which will support custodial yields going forward and the inherent profitability of HSAs. FY23 will be the third year of the downward custodial yield cycle that began around the onset of the pandemic and of which you're all familiar. But we're cautiously optimistic that it will be the last. While tightly focusing on the HSA core, we are streamlining elsewhere. Migration of business from duplicative legacy CDB platforms acquired with WageWorks will be completed substantially in support and entirely in the new year. I mentioned earlier the decision to discontinue one-off services that won't help us grow, and we've also agreed with further sellers to terminate our agreement to buy the VEBA accounts, which was an ancillary and severable component of the overall further acquisition. That frees up $45 million of corporate cash for core growth opportunities. I'll now turn the call over to Tyson for additional detail on Q3 and year-to-date operating performance and updated guidance for the current fiscal year. Mr. Murdoch.