Good afternoon and welcome to HealthEquity’s Second Quarter of Fiscal Year 2020 Earnings Conference Call. My name is Richard Putnam, I do Investor Relations for HealthEquity and joining me today is Jon Kessler, President and CEO; Dr. Steve Neeleman, Vice Chair and Founder of the Company; Darcy Mott, the Company's Executive Vice President and CFO; Tyson Murdock, Executive Vice President and Deputy CFO and Ted Bloomberg, our Chief Operating Officer. Before I turn the call over to Jon, I have three important reminders to provide. First, we reported our second quarter earnings after the market close this afternoon. A copy of today’s press release and 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, September 8, 2020, and will include forward-looking statements as defined by the SEC, which include predictions, expectations, estimates, and 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 risks 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 annual report on Form 10-K and in 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. Third, during this call, we will reference non-GAAP financial measures that are defined in our press release. There you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. At the conclusion of our prepared remarks, we’ll turn the call over to the operator to provide instructions and to host our Q&A. With that, I'll turn the call over to our CEO, Jon Kessler.

Thank you, Richard, nicely done. Hello, everyone and thanks first off to a really great effort by our teammates. Thanks to their effort, we're able to deliver a bit of sort of normalcy today. Q2 financial results exceeded our expectations, showcasing faster progress on integration, improving profit margins, and indications of recovering activity and a strong selling season despite the ongoing pandemic. I will discuss Q2 performance versus key metrics, Ted will update on WageWorks integration, Tyson will detail financial results, and Darcy will cover our renewed full-year guidance. Steve is here to join in the Q&A. So, turning to key metrics, revenue of $176 million is up 103% year-over-year, reflecting organic growth and the addition of WageWorks but tempered by lower custodial yields and our members' limited use of commuter benefits and healthcare cards during the pandemic. We estimate that lower commuter benefits utilization and healthcare card spend reduced revenue by $16 million during the quarter, and absent those impacts, that revenue would have risen 122% year-over-year. Adjusted EBITDA of $60 million is up 48% year-over-year, with a 34% adjusted EBITDA margin showing sequential improvement despite the loss of high-margin revenue. This reflects the team's realization of efficiencies as Ted will discuss, as platform consolidation begins in earnest, and our rapid response to changing circumstances. We believe that the margin results speak directly to HealthEquity’s long-term profit potential. We ended the quarter with 5.4 million HSAs and 12.5 million total accounts, representing growth of 29% and 158% year-over-year. Sequentially, HSAs were slightly up with 108,000 newly opened HSAs, a strong figure as many enrollments occurred during the darkest days of the pandemic. New HSA openings were partially offset by closures as we migrate business from Legacy WageWorks custodians to HealthEquity’s platform, a process that is nearing completion. Growth of 0.2 million FSAs, HRAs, and COBRA qualifiers is offset by the near-term loss of 0.5 million commuters. Excluding the commuters, consumer-directed benefits accounts are up 4%, and total accounts are up 2% sequentially over Q1, reflecting both a strong start to the sales year and the benefit of extended regulatory grace periods. Last but certainly not least, HSA assets reached $12.2 billion, up 43% year-over-year. $0.7 billion in sequential organic growth is the largest ever outside of a Q4 enrollment period, and this growth in HSA assets is net of approximately $125 million lost in the migration process from Legacy WageWorks HSA platforms. The sales pipeline remains robust. Overall win rates thus far are strong and our RFPs include total solution and cross-sell opportunities, making them more valuable. As with baseball, it's a unique sales season. Team Purple is getting at bat, improving its batting average and slugging percentage, and that's good. HealthEquity also continues to outpace HSA competitors. According to Devenir’s mid-year market report released last week, the HSA market as a whole grew accounts by 12% and assets by 19% for the year ended June 30. As mentioned, we’re reporting 29% account and 43% asset growth year-over-year as of the end of fiscal Q2. This includes the WageWorks acquisition, but organically, we were up 13% in accounts and 25% in assets, which is better than the market. HealthEquity’s Total Solution, market leadership, and Purple service culture are the reasons for its continued outperformance. On that positive note, I’ll turn the call over to Ted for details on the status of WageWorks integration, its heightened pace, and resulting long-term profit potential. Ted?

Thank you, Jon. We’re excited today to report accelerated progress and to raise our goals for merger integration synergies. This is due entirely to our team's remarkable performance despite the pandemic, and we couldn't be prouder of their efforts during Q2. Let me begin with an update on key integration metrics. Recurring net synergies achieved as of the end of fiscal Q2 surpassed $50 million. As a reminder, a year ago, we promised we would hit that number within 24 to 36 months. We have migrated seven duplicate platforms as of the end of Q2 against the goal of 10 migrations by fiscal year-end. The completed migrations include 5,000 clients, 700,000 members, and $1.2 billion of HSA assets moved, with 96% of service fees retained. We have invested a total of $55 million as of the end of Q2 to achieve these synergies and complete integration. Migrating all of our business to a single operational platform will yield additional efficiencies beyond those already achieved. We have said before that we would not report separately on integration efficiencies once that $50 million net synergy target has been reached. However, platform consolidation continues to produce efficiencies. So we’re raising our goal from $50 million to $80 million of recurring net synergies from the WageWorks acquisition. We expect to achieve the additional $30 million within 18 months from today, and to get there, we will invest at the high end of our previously stated $80 million to $100 million one-time integration expense range. We will continue to report regularly on recurring net synergies achieved and one-time expenses incurred as I have done today until our raised target is met. We believe that integration investment will also drive top-line growth for years to come. Jon talked about the emergence of total solution sales in our pipeline and wins through Q2. Beyond sales themselves, integration increases the value HealthEquity can deliver and receive. For example, the migration of more than $1 billion in HSA assets year-to-date from legacy custodians to HealthEquity enables us to deploy our proven member engagement capabilities to help people build HSA balances and give employers visibility to overall engagement progress. As integration continues, we will train these engagement resources on FSAs, for example, to drive members to utilize unspent balances, and as Jon mentioned to COBRA, where we will help our members understand their available choices for staying covered. Integration means delivering on our commitment to remarkable Purple service in everything we do. Loyalty scores of WageWorks clients have risen throughout Q1 and Q2 in response to the consolidation of all service calls onshore, a promise completed in June, and the expansion of HealthEquity’s Voice of the Client program to these clients. Beyond integration itself, we continue to invest meaningful capital in the future of the HealthEquity platform, including better client experience interfaces, capacity for deeper data-driven engagement, faster innovation through microservices infrastructure, and enhanced security to keep up with emerging threats. Despite the pandemic's near-term economic impact on our business, we have kept integration on course and are continuing to invest for the future. These decisions have helped keep our team members energized as well. Measures of team member engagement dramatically increased in the first half of the fiscal year. Building Purple culture while 97% of us continue to work from home is an everyday challenge, and we’re fortunate to have leaders and teammates who are making it happen. Speaking of leaders, I have the honor of the first hand-off on one of these calls to Tyson Murdock, HealthEquity’s newly minted Deputy CFO, fellow father of three, who will review the quarter’s financial results in detail. Tyson?

Thank you, Ted. I will review our second quarter GAAP and non-GAAP financial results. A reconciliation of GAAP measures to non-GAAP measures is found in today's press release. Our fiscal second quarter financial results include the operations of WageWorks, which was acquired in Q3 of last year. Second quarter revenue grew overall and organically in each of our three categories. Service revenue grew to $103.8 million, representing 59% of total revenue in the quarter, and 295% year-over-year growth. The increase is primarily attributable to 159% growth in average total accounts from acquisitions, including WageWorks and New Sales. As discussed last quarter, service revenue specifically commuter service revenue was impacted by a large majority of our members working from home as offices shut down in major U.S. cities. As temporary benefit extensions expire and layoffs shift to benefit eligible workers, we're beginning to see more COBRA qualifying events, which could partially offset commuter headwinds in the second half of this year. Custodial revenue grew to $46.9 million in the second quarter, representing 27% of revenue in the quarter and 8% year-over-year growth. The increase is primarily attributed to 31% growth in average HSA cash with yield and 41% growth in average HSA investments with yield year-over-year, partially offset by lower annualized interest rate yield of 210 basis points on HSA cash with yield. This yield is a blended rate for all HSA cash with yield during the quarter. The HSA assets table of today's press release provides additional details. As previously mentioned, we have nearly completed migrating HSA assets and expect to complete additional migrations by the end of the fiscal year. Interchange revenue grew to $25.3 million, representing 14% of total revenue in the quarter and 51% year-over-year growth. The increase is primarily attributable to growth in average total accounts and a negotiated more favorable interchange share, partially offset by reduced spend across our platforms in the quarter. While we believe it will take some time before we see members reactivate commuter accounts, we’re seeing healthcare markets provide more access for consumers as the economy reopens. We believe many of the reimbursement accounts, FSAs, and HRAs will accelerate their spend by the end of the year. Profit reached $101.8 million compared to $58.4 million in the second quarter of last year. Gross margin was 58% in the quarter versus 57% for the first quarter of this year, and 67% for the second quarter of last year. Last year's pre-merger Q2 was a peak gross margin quarter in our history. Beyond the change in revenue mix resulting from the WageWorks acquisition, gross margin was impacted in Q2 by the declining custodial cash yield, loss of high-margin interchange revenue, and COVID-19-related expenses. Operating expenses were $92.8 million or 53% of revenue, including amortization of acquired intangible assets and merger integration expenses, which together represented 17% of revenue. Income from operations was $9 million. As Jon mentioned, adjusted EBITDA margin was 34%, up from 33% reported for the partially COVID-impacted first quarter, so we increased margin on lower revenue quarter-over-quarter while operating through the full impact of COVID in the second quarter. For the first six months of fiscal 2021, revenue was $366.1 million, up 111% compared to the first six months of last year, GAAP net income was $1.7 million or $0.02 per diluted share. Non-GAAP net income was $60.9 million or $0.83 per diluted share, and adjusted EBITDA was $123 million, up 55% from the prior-year, resulting in a 34% margin for the first half of this fiscal year. On the balance sheet as of July 31, 2020, we had $269 million of cash and cash equivalents with $1 billion of Term A debt outstanding and no amounts drawn on our line of credit. The $287 million equity offering that we completed in July allowed us to reduce our Term A debt with a $200 million debt repayment, lowering our debt-to-EBITDA ratio, and resulting in a lower interest rate share. I will now pass the mic to Darcy to review our updated guidance. Darcy?

Thank you, Tyson. As you know, due to the uncertain impact of the pandemic and its economic fallout at the time in June, we withdrew guidance for full-year fiscal 2021 and provided guidance for the second quarter only. Second half results will depend on the pace of reopening and economic recovery. However, based on our second quarter operating results and the economic progress to date, we’re resuming guidance for the full-year fiscal year 2021. Specific variables that will impact our performance through the remainder of fiscal year 2021 include, but are not limited to, members' access to and spending on healthcare as distancing restrictions ease and their use of transit, parking, and other commuter benefits as workplaces partially or fully reopen. The modest pace of recovery in employment may negatively impact the number of our average total accounts and conversely perhaps spur uptake in COBRA and other benefit continuation products among current or new COBRA eligible members. Across these and other variables, there exists a wide range of possible outcomes for the remainder of fiscal 2021, resulting in a wider guidance range than we would otherwise provide. Importantly, our guidance for fiscal 2021 assumes that current trends across these and other variables continue through the remainder of the year. Under these assumptions, we expect HealthEquity will generate revenue for fiscal 2021 in a range between $720 million and $730 million. We expect our non-GAAP net income to be between $111 million and $119 million resulting in non-GAAP diluted net income per share between $1.48 and $1.58 per share. We expect HealthEquity’s adjusted EBITDA to be between $226 million and $236 million for fiscal 2021. Today's guidance includes the effect of our achievement of the goal of $50 million in annualized run-rate net synergies as of the end of the second quarter. As Ted discussed, we’re increasing our estimate for net synergies to $80 million expected to be achieved within the next 18 months. Realization of synergies is expected to be additive to both the top line and bottom line in fiscal year 2021 and beyond. We expect a yield of approximately 2.05% on HSA cash during the full year fiscal 2021. Our non-GAAP diluted net income per share estimate is based on an estimated diluted weighted average shares outstanding of approximately 75 million shares for the year. The outlook for fiscal 2021 assumes a projected statutory income tax rate of approximately 25%. Our guidance includes a detailed reconciliation of GAAP to non-GAAP 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 is being excluded from non-GAAP net income, the revenue generated from those acquired intangible assets is not included. With that, I'll turn the call back over to Jon for some closing remarks.

Thank you, Darcy and Ted, Tyson nicely done. Again, I do want to thank not only our teammates but also our partners and clients and the hundreds of HR professionals working in living rooms and kitchens across the country for their resiliency and focus during what was obviously an extremely unusual quarter. With that, let's open the call up to questions. Operator?

Our first question comes from Anne Samuel from JPMorgan. Your line is now open.

Hi, guys. Congrats on a nice quarter.

Thank you, Anne.

I had a question around, you spoke to more COBRA qualifying events offsetting commuter in the quarter, I was wondering maybe what that means about the employment backdrop and how you're thinking about that and if that's impacting asset growth at all?

Yes, well it's a good question. Thank you, appreciate it. Just as a way of backdrop, COBRA generates pre-COVID about $85 million a year in annual run rate, 70% of the fees come from employer contracts, 20% from premiums and about 10% from various activity, notices and the like. So when the pandemic started in March and April, the job losses did not have a material impact on COBRA. We saw a short-lived spike in QEs around May 1, but many of those who lost jobs during that period weren't benefit eligible or were in small businesses that are not required to offer COBRA. Of course, there were also furloughs, another way to say temporary benefits extensions. Our client base skews somewhat large with only 7% of our total accounts in exposed industries. So what we've seen at the end of July and August is a little different and greater impact as the slowdown resembles more of a typical demand-driven recession. Our QEs in late July and into August are roughly 100% up year-over-year. It sounds like a lot. It's not a lot relative to unemployment, but it's material. We've also seen a modest rise year-over-year in the percentage of those QEs that are uptaking qualified benefits. Lastly, the regulatory flexibility offered by the administration regarding COBRA deadlines muddies the waters a bit. Employees have an undetermined amount of time to select COBRA, so there may be people who have not opted that ultimately will. Employers desire a comprehensive solution that provides administrative excellence and compliance excellence, as well as initiatives to ensure that COBRA members get and stay covered. We have a full COBRA sales pipeline. That’s where we stand on COBRA, and since we haven't really been through this before, we've been somewhat conservative in our forecasts, but it's reasonable to believe that we will see some incremental benefit on the COBRA side in the second half of the year. As for what that says about the general employment picture and the broader impact for our account business. It indicates that this recession is beginning to resemble a more typical recession. We anticipate headwinds going forward more than we experienced in the second quarter, and that conservatism is built into our guidance. However, COBRA provides an offset to that. In the grand picture, we are looking to finish the year with unemployment below 10%, which would allow us to start to think about this as a normal recession, and we're currently at 8.4. So I view it as such with negatives turning to positives as the economy recovers.

That's really helpful. Thank you. Maybe just another one, maybe on a more positive note. Can you provide some early comments around how the selling season has been going with the combination with the region? And how those conversations are going?

We have a significant number of our existing clients in cross-sell discussions to add products to get total solution. The total solution message has played very well from our perspective for both bringing more RFPs and for those RFPs being higher values. It’s challenging to benchmark in light of COVID. About a third of the opportunities we see have been deferred due to COVID. However, because we're winning a lot and seeing our batting percentage improving, we feel optimistic about where we’re heading into the final stretch of the sales season.

That's great. Thanks, guys.

Thanks, Anne.

Good afternoon, everyone. Tyson, you did a flawless job reading the script. The only question I have is who wrote it? Yes, Richard can you help reconcile the account number data? The HSAs if I go sequentially from year-end of 5.344 to 5.380 at the end of the first quarter to 5.384. The CDBs were downward going from 7.437 to 7.338 to 7.090. As for the HSA numbers, you discuss organic growth but the actual number is not increasing much. And on CDBs, it's a downward trend. So just trying to get some sense directionally on what's occurring under that.

Yes, I'll start with the CDB side. We had about 200,000 new non-HSA CDBs offset by a loss of commuter accounts. Commuter accounts are accounted for if they're not adding value in a given month; they’re not included in the account numbers. Many added value at the beginning of the year but ceased once it was clear they were staying home. So CDBs were actually up 4% quarter-over-quarter. Regarding HSAs, we had more closures this quarter due to migrations nearing completion. We've seen a standard closure rate against the entire book around 1.5%; on top of that, there were approximately 90,000 migration-related closures from accounts either not migrated or duplicates. So that’s what's contributing to an unusual attrition rate, but this aligns with our migration expectations.

With respect to the closures in HSAs year-to-date, there's the standard close rate of around 1.5% and an additional 90,000 closures due to the migration, consisting of three factors: accounts not migrated, duplicates being consolidated, and typical attrition during such a process. This aligns with our expectations versus what we've experienced in the past.

Got it, thanks for that answer. My second question would be just around the revenue cash yield from the HSA cash balances. Tyson, you mentioned 210 basis points in the second quarter. Can you provide an updated perspective on cash yield? Given we're in a recession, does that lessen the demand by banks for your cash deposits? And can we still expect that 75 to 125 basis points spread over three-year jumbo CD rates, et cetera?

Greg, when we guided for Q2, we based on yields and came in at 210 for the quarter. As we look towards the remainder of the year, there's more uncertainty about rates. We are being conservative in our forecasting as rates have fallen. There are three factors impacting overall yield: the migration of Wage assets, growth in cash balances leading to more placements, as well as variable rates that have come down slightly during the quarter. So we're looking to stay conservative with our forecasting but acknowledge uncertainty regarding rates.

Darcy covered the whole universe there.

Thank you for your answers, gentlemen.

Thanks for the questions. Jon, could you address EBITDA in the quarter and guidance? The quarter exceeded expectations; what contributed to those positive results?

During the second quarter, we had about $6 million more revenue; that played a role in EBITDA. We beat EBITDA by more than that, which reflects accelerated realization of synergies. While we’ve asked our teammates to do extraordinary things during this time, we certainly feel our effort was commendable. Our views of the transaction suggested that the business could be profitable when unified on one platform.

For the strong open enrollment season, we lean in on servicing expenses as we ensure proper support for all new customers on new platforms. We're investing in the business even during COVID, hiring more while ensuring a fully virtual open enrollment season. Although uncertainty exists, we remain conservative in our guidance based on observed trends.

I appreciate the thoughts from both of you. Thank you.

I wanted to expand on a previous comment about the virtual environment. What is your approach to engaging members in HSAs and ensuring they effectively use them?

We viewed the lack of in-person interaction as an opportunity. Instead of saving costs, we invested in training our engagement resources for virtual interactions. Custom solutions for our clients enhance member outreach and encourage enrollment while expanding our understanding of effectiveness going forward. This year will provide invaluable insights for the future.

Thank you for elaborating on that.

Good afternoon, guys, and thanks for taking the question. Jon, you touched on some in your previous response but can you talk about top line synergies? How we should consider the $30 million increase in gross versus net, and does any of it need to be reinvested back?

On the top line, our original estimate included about $27 million from top line synergies stemming from interchange, which has been achieved despite declining spending levels. The timing reflects the completion of one platform consolidation, and we expect further opportunities to expand through strategic investments.

Revenue synergies relate to custodial and interchange revenues, not cross-selling or additional product sales to existing customers, which remain separate.

Can you clarify about the commuter accounts? If 500,000 have been deactivated, do they get turned back on, or do employers have to resell?

No, they remain open for enrollment. We will communicate options for members to utilize their accounts while messaging to employers to return to work, but we continue to receive monthly enrollment fees from those employers.

Thank you for clarifying. And regarding margins, you estimated about a $16 million revenue impact from COVID. How much degradation of margins should we anticipate?

Commuter business is high-margin. While revenue dropped, we found ways to mitigate losses through efficiencies, rejuvenating the overall EBITDA margin. So the losses will improve as the economy recovers.

Can you elaborate on the EBITDA guidance for both the quarter and the upcoming guidance period? Could you disclose the contribution from net synergies?

The positive results reflect accelerated synergies despite the COVID impact. We’re aware of the extraordinary work required from our teammates during this crucial time.

Can you tell us about the ongoing consumer-directed benefit opportunities and if win rates have improved?

Win rates for total solution opportunities remain strong. We haven't seen a significant change in the numbers for consumer-directed but would recount overall positivity as we progress into the season.

Thank you for that detail.

Can we consider the potential changes resulting from the upcoming election and how will that affect your lobbying efforts?

We have a bipartisan effort to protect employer-sponsored benefits, and we will continue advocating regardless of the election outcomes. We believe in the necessity of programs that aid consumers and employers in managing healthcare cost while maximizing tax benefits.

Excellent response, Steve.

How many platform migrations have been achieved thus far out of the Wage set?

We completed seven migrations by the end of Q2, and we're on track for at least 10 by year-end.

Regarding the increase in synergies, is it primarily from these platform migrations or else?

The majority of synergies are from platform consolidations, with a few additional sources contributing. This should enhance our efficiencies and profitability.

Great insights. Thank you.

Thank you all for your excellent questions and attention today. We're dedicated to driving forward and achieving our goals through the remainder of the year.

Thank you. At this time, I’m showing no further questions. I would like to turn the call back over to management for closing remarks.