Thank you, Carmen. Good afternoon. Welcome to HealthEquity’s First Quarter Fiscal Year 2022 Earnings Conference Call. My name is Richard Putnam, Investor Relations for HealthEquity. And joining me today is Jon Kessler, President and CEO; Dr. Steve Neeleman, our Vice Chair and Founder of the Company; Tyson Murdock, 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 Jon, I have two important reminders. First, a press release announcing our financial results for the first quarter of fiscal year 2022 was issued after the market closed this afternoon. The metrics reported in that press release include contributions from our wholly owned subsidiary WageWorks and accounts it administers. The press release also includes definitions of certain non-GAAP financial measures that we will reference today. A copy of today’s press release including reconciliations of these non-GAAP measures 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, June 7, 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 risks and uncertainties 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 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 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. 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. I’ll now turn the mic over to our CEO, Jon Kessler.

Thank you, Richard. Well done. Hello everyone, and thank you for joining us on this somewhat brisk very late spring afternoon. Today, we are announcing strong results for HealthEquity’s fiscal first quarter of fiscal year 2022, which ended on April 30, and we are also raising guidance for the full 2022 fiscal year. I will discuss our Q1 results and acquisition activity during the quarter, Ted will review operations and progress on WageWorks integration, and Tyson will review the financial details of the quarter and provide detail on our updated guidance for fiscal 2022 based on the results that we are reporting today. Steve Neeleman is here and will join in on the Q&A. Looking first to the five key metrics that drive our business and that we’ve been reporting on for a long time. HealthEquity benefited from the initial economic reopening trends that helped drive year-over-year growth in HSA members and in assets, while commuter and yield headwinds continue to impact total accounts and revenue. Revenue of $184.2 million fell 3% compared to the largely pre-pandemic first quarter of last year and that was due to lower year-over-year custodial yields and commuter revenue, which were partially offset by HSA member growth, asset growth, and other CDB growth. Adjusted EBITDA of $59.0 million was similarly down from the first quarter of last year of $63 million. Total accounts ended the quarter at 12.8 million, which does not include the nearly 700,000 commuter accounts that remain in suspense. HSA members at quarter’s end reached 5.8 million, up 9% year-over-year, and HSA assets at quarter’s end reached a record $15 billion, up an even larger 31% from a year ago. That’s a lot of percent. As Ted will detail, Team Purple started fiscal 2022 with very promising sales results, including a fiscal first quarter record of 115,000 new HSAs, up 11% from 104,000 new HSAs opened in Q1 last year. HSA investments grew by over $770 million in the quarter as members and their employers continue to contribute and invest. Investing HSA members grew 51% year-over-year with more of our members connecting health and wealth, and the average balance of HSA members grew an incredible 20% year-over-year and even 4% sequentially from the fiscal year end, despite a restart of spending. In addition to these strong organic results, in Q1 HealthEquity reached agreements to put roughly $600 million to work driving additional growth this year and for years to come through the acquisitions of Luum, Further, and The Fifth Third Bank’s HSA portfolio. Luum is supporting the post-pandemic reboot of our commuter benefits, helping clients launch hybrid workplace strategies as offices reopen. Longer term, we think that Luum and commuter benefits in general will really be the tools clients use to shrink employee commuting’s carbon footprint. Further and Fifth Third will enhance HealthEquity’s market leadership and scale in our core and growing HSA business, adding approximately 0.7 million HSAs and more than $2 billion of custodial assets upon their respective closings later this year. These figures are, of course, not included in the numbers that we reported today. Further, we’ll strengthen the network partner strategy that has helped fuel HealthEquity’s HSA growth from its very beginning, with significant new partners increased commitment to the Blue Cross and Blue Shield system, and new API-based platform capabilities to support flexible branding and deeper integration of HealthEquity into our partners’ offerings. It will also add deeper integration to HealthEquity’s total 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 tailwinds. Healthcare card spend reached pre-pandemic levels for the first time during the latter half of Q1, with formerly lagging categories such as medical office visits showing strong growth. New sales opportunities and RFP volume and the value of client wins all rose year-over-year in Q1, in line with new HSA opening growth that we reported today. Bond yields rose and the yield curve steepened with both 10-year treasuries and the 10-year versus three months spread adding more than 50 basis points during our Q1, and that perhaps portends a rebound in HealthEquity’s custodial yields in the future. To fully capitalize on that trend, we are expanding our roster of principal guarantee partners, what we previously called deposit partners, to include new insurers as well as banks and credit unions, increasing competition for our managed assets and choice for our HSA members. Leading employers announced plans to reopen their urban offices after Labor Day, consistent with our assumption of a start to commuter recovery in the second half of the year. So, in total in Q1, while pandemic effects still weighed on our financial performance, the team delivered strong sales, we committed to acquisition investments with significant long-term growth benefits, and there was compelling evidence of headwinds becoming tailwinds to growth for fiscal 2022 and beyond. With that, I will turn the call over to Ted to review operations and integration.

Thanks, Jon. Good afternoon, everybody. As Jon mentioned, our selling season is off to a great start. First quarter new HSA sales were up 11% year-over-year and 29% versus the first quarter of fiscal 2020. We’re seeing evidence that business opportunities are returning and that the stalled and deferred deals from last year are coming back to the market. RFPs which only represent a portion of our pipeline are up 13% year-over-year with bundled RFPs, meaning more than one product, up 15% year-over-year. In the small and medium-sized market, our sales opportunities are up even more owing both to our marketing efforts and the strong relationships we have with our distribution partners. Cross-sell activities also continue to bear fruit as 30 enterprise partners have agreed to add new services by January 1, 2022, so far this year and 13 distribution partners have added new HealthEquity services to their shelves. On the integration front, we have a lot going on. The team completed another four platform migrations in Q1, and we are on track to complete the migrations and decommission work connected to the WageWorks platforms by the middle of fiscal 2023, which is ahead of schedule despite our recently announced acquisitions and execution on the COBRA subsidy, both of which leverage many of the same talented team members. While we have migrated 17 of the largest platforms and realized $65 million of synergies to-date, there remain a number of small and mid-sized migrations to complete to realize the remaining $15 million of the $80 million in permanent run rate synergies promised. As Jon mentioned, we are well-positioned to become the leading HSA provider once the Further and Fifth Third deals are closed. Planning efforts are underway to achieve $15 million of cost and revenue synergies within three years of close on the Further transaction and we believe that likely more after that as we fully integrate our technology platforms. Additionally, our cross-selling pipeline with Luum is beginning to fill with promising opportunities. Last but not least, a huge shout out to the entire organization for the tireless efforts required to execute against the recent COBRA subsidy regulations. It takes our entire village to support this effort and partner with clients to deliver this subsidy to those that are eligible. There is still much to do, but we have started fiscal 2022 quickly and on the right foot. Thanks to the continued efforts of Team Purple. Now I will turn it over to Tyson to review our financial results.

Thank you, Ted. I will review our first quarter GAAP and non-GAAP financial results. A reconciliation of GAAP measures to non-GAAP measures is found in today’s press release. First quarter revenue declined 3% as the economic effects of the pandemic impacted service revenue. Service revenue declined 8% to $102.5 million representing 56% of total revenue in the quarter. The decrease is primarily attributable to an over 60% decrease in active commuter accounts, while the growth in HSAs and other CDBs helped average accounts increase 1% year-over-year. Custodial revenue grew slightly to $47 million in the first quarter, compared to $46.9 million in the prior year first quarter, as 19% growth in average HSA cash with yield and 91% growth in average HSA investments with yield more than offset a 33-basis-point decline in the annualized yield on HSA cash. The annualized interest rate yield was 179 basis points on HSA cash with yield during the first quarter of this year. 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. Interchange revenue grew 9% to $34.7 million, representing 19% of total revenue in the quarter. The interchange revenue increase was primarily due to a rebound in spend across our platforms in the quarter and growth in average total accounts. Gross profit was $103.1 million, compared to $108.1 million in the first quarter of last year. Gross margin was 56% in the quarter. Operating expenses were $98.9 million or 54% of revenue including amortization of acquired intangible assets and merger integration expenses, which together represented 16% of revenue. Income from operations was $4.3 million, compared to $15.1 million in the prior quarter. Net loss for the quarter was $2.6 million or a loss of $0.03 per share on a GAAP EPS basis compared to net income of $1.8 million or $0.03 per share in the prior year. Our non-GAAP net income was $31 million for the first quarter of this year, up from $30.8 million a year ago. Non-GAAP net income per share was $0.38 per share, compared to $0.43 per share last year. Adjusted EBITDA for the quarter decreased 6% to $59 million, and adjusted EBITDA margin was 32%, while operating through the impact of COVID. Turning to the balance sheet. As of April 30, 2021, we had $737 million of cash and cash equivalents, with $972 million of debt outstanding net of issuance costs, with no outstanding amounts drawn on our line of credit. The cash balance, of course, will still include the funding required to close the Further and Fifth Third HSA acquisitions. Based on where we ended the first quarter and our current view of the economic environment, we are providing the following guidance for fiscal 2022. Revenue for fiscal 2022 to range between $755 million and $765 million, non-GAAP net income to be between $122 million and $126 million, resulting in non-GAAP diluted net income between $1.45 per share and $1.50 per share based upon an estimated 84 million shares outstanding for the year, and adjusted EBITDA to be between $241 million and $247 million. Today’s guidance includes our most recent estimate of service custodial and 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 HSAs from Fifth Third Bank. As Jon indicated earlier, we anticipate closing on both those acquisitions later this year. Our guidance assumes a yield on HSA cash with yield of approximately 175 basis points as with all of today’s guidance, our yield guidance does not include the pending Further or Fifth Third HSA acquisitions, including the transition of HSA cash, insured assets to HealthEquity principal guarantee partners at the then prevailing rates. We also continue to 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 also contemplates estimated revenue from COBRA subsidy efforts and the effect of run rate synergies from WageWorks that Ted discussed. The outlook for fiscal 2022 assumes a projected statutory income tax rate of approximately 25% and a diluted share count of 84 million. As we have done in recent reporting periods, our full-year guidance includes a detailed reconciliation of GAAP to the non-GAAP metrics provided in the earnings release and a definition of all such items is 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 excluded. With that, I’ll turn the call back over to Jon for some closing remarks. Thanks.

Thanks, everybody. Thanks, Tyson, nicely done, and Ted. So typically at this point in the proceedings, I think those responsible for the promising start to the year and that’s Purple team members. Today, I also like to give thanks for something else, which is the resiliency of teammates over the past 15 months. We stayed safe, families are taken care of, well deserved bonuses were paid, and despite not seeing each other in person for more than a year, our team became a more inclusive and more cohesive bunch, better positioned to deliver on HealthEquity’s full potential for our members, our clients, our partners, and of course, our shareholders. This is not something leaders do, and in fact, I haven’t even put on long pants in 15 months and we all know from the weekend the challenges that some leaders have with pants. So this is something teams did. Thank you, Team Purple, for this truly remarkable achievement. With that, let’s open the call to questions.

Thank you. Our first question comes from Greg Peters with Raymond James.

Good afternoon, everyone.

Good afternoon, Greg.

Hey. Thank you for your comments about pants. You know how to paint a picture for sure.

I mean, all I’m saying is it seems like my shorts policy has been justified by all the pants attention.

I got it. I’m in shorts right now myself. So...

As you should, everyone in Florida should be.

I would like to take a moment for Tyson and Jon to discuss the service revenue component. Tyson, you mentioned earlier the reasons for the pressure on service revenue. My main interest is not in what occurred in the first quarter, but rather how I should view service revenue as a percentage of total accounts. As the economy is expected to recover in the latter half of the year, should I anticipate improvements in these numbers on a per account basis, or are there competitive pressures that might limit the growth of service revenue on a per account basis?

I’ll go ahead and start, Jon.

Tyson?

It really comes down to the return of commuters, as that significantly affects our service revenue. It's crucial to consider how this return will impact your model. We've noted that our business is seeing people come back, especially around September, and we're monitoring this closely. Although we haven't fully observed this return yet, we can see signs in the media and at events, indicating it will happen. On the competitive front, as Ted mentioned, we're enjoying a successful selling season, and we have metrics to prove that. There's nothing unusual about our situation based on previous discussions. We continue to work on increasing HSA accounts, and while our pricing may decrease slightly each year, we remain competitive, particularly when we can structure deals that yield the right revenue and profit. I believe that's the primary constant in terms of competition. I'll pause here and see if Jon has anything else to add.

No, I’m not sure I have anything substantial to add, but I will contribute something. The commuter rebound is not going to be an immediate change. We discussed this last quarter when Greg and others asked about our cautious outlook regarding the commuter rebound, and that perspective still holds true. However, it is clearly happening as people return to cities. This is the most significant factor in the overall discussion.

Okay. My follow-up question focuses on mergers and acquisitions. You've had a busy year, raised equity, and announced significant transactions to utilize that capital. What is your perspective on the M&A pipeline? Should shareholders anticipate another capital raise to pursue potential opportunities in the market, or are you currently occupied managing the initiatives you've already announced?

I think the key takeaway here is that our business is experiencing increasing returns to scale, and those returns won't be distributed evenly. As a result, we can expect continued M&A activity. We’ve shown our ability to generate strong returns from M&A, particularly with portfolio-related deals, and from the perspective of sellers, we make for a solid partner. The Fifth Third transaction serves as an example of this, as we navigated some challenges to successfully complete the deal. The important points for us are whether we can deliver good returns and be a reliable partner for sellers, which we believe is a winning combination. While I cannot predict the specific deals for the upcoming quarters, we do have some resources available for future opportunities and will pursue them if we believe they will deliver strong returns for our shareholders. That's my current perspective.

Got it. Thanks for the answers.

Thanks Greg.

Yeah. Thanks, Greg.

Thank you. Our next question comes from George Hill with Deutsche Bank. Your question please.

Good morning, guys. Thanks for taking the question. And Jon, I’ll say it’s over 90 degrees in New Hampshire. So I’m in shorts too.

Outstanding.

I guess, I want to…

Probably on backwards.

I don’t know about that. I would just focus in on two questions. Number one is on the selling season, and I guess, do 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 2022 starts? And part B of my question is, I don’t know if you have the ability to have interactions with the customers of either Further or Fifth Third, by talking about maybe net dollar retention or net client retention, would love to hear your thoughts around that?

Yeah. Ted, why don’t you start and then Steve can provide some color around what we’re seeing in the sales cycle and beyond the statistics offered earlier, and Ted I think you’re in a great position, I’ll add something if it’s valuable to talk about the Further clients since collectively we’ve talked to most of them.

I’m happy to start the discussion and then let you both add your insights. Regarding your first question about the sales cycle, we are cautiously optimistic. Our sales team is actively engaged, and the quality of the meetings we are having with finalists is strong. Deals that were not viable last year are re-entering the market, and our partnerships are growing. However, as you know, we won’t fully understand the sales cycle outcome until January 2022. All the indicators, including activity levels and initial engagement, are aligning well, and we feel optimistic about our position within the market. Now, addressing your second question about the Further and Fifth Third client base, we conducted thorough analytical assessments and market research in preparation for these acquisitions, particularly with Further, which has an excellent reputation. Their clients and distribution partners have positive experiences with them, which was a significant factor in our acquisition. We are hopeful for strong client and partner retention from both entities. I’ve participated in many calls with clients and distribution partners, and we’re encouraged by the feedback received. We believe the Further team has a long-standing track record of providing high-quality service, so we’re optimistic about retention, although there's still much work to be done. Now I'll hand it over to Jon and Steve for further insights.

Steve?

It's great to hear from you, George. I want to build on what Ted mentioned. This year, we've noticed a significant change in the tone of these meetings. Unlike last year, where everyone seemed frantic trying to get employees out of the office amidst many distractions, there's now a much better focus. People are making decisions, and while we want to win every opportunity, sometimes leaders think it's more beneficial to acknowledge we're heading in a new direction rather than delaying decisions for another year, which would just reset the cycle. We're confident that even if clients don’t choose HealthEquity right away, they will eventually select us. We've observed a much more positive intent to move forward, offering health savings accounts and other consumer-directed benefits to their members. This feels like a favorable shift compared to last year when we faced numerous challenges. Many potential clients seemed distracted, and we often found ourselves not at the forefront of their minds during final discussions. We feel encouraged, and I truly enjoy participating in these calls and meetings alongside our teams.

The point I’ll add is that the answers effectively address the question around market share growth. Regarding market growth, one of the items Ted mentioned is that the growth we have seen in lead flow around the SMB and mid-sized markets is significantly several times higher than last year. This improvement is partly due to the efforts made by the team to strengthen direct selling and enhance marketing and lead generation efforts on the B2B side for small and mid-sized businesses, now that we have a product to sell. This also reflects genuine growth in that area of the market, which we really want to see for overall market outperformance. So, consistent with earlier comments, the answer is that it’s only one quarter, but it’s a quarter that shows promising results both in terms of actual accounts compared to competitors and the pipeline data.

Very helpful, Jon. Thank you.

Thank you, sir.

Our next question is from David Larsen with BTIG. Your question please.

Hi, David.

Hi. Hi. Congratulations on a good quarter and a good start to the year here.

Thank you.

Can you maybe talk? Yes. Can you maybe talk a little bit more about your expectations for custodial revenue? It seems to me like the yield environment is coming in right in line with where you thought it would. Just any thoughts around where that might trend going forward. There has been talk about rising inflation, potential for the Fed to raise interest rates. Just any more color around that would be very helpful? Thanks so much.

Sure. In the short term, it's important to highlight that our guidance for the year remains at $175 million for custodial yields, unchanged despite achieving $179 million in cash yield in Q1. As mentioned last quarter, we anticipated a slight decline in yield over the year due to our multiyear agreements rolling over. The overall yield challenge persists, but there are promising developments occurring both within our company and in the broader market. We often focus on recent trends, but we’ve completed our first fiscal quarter, and medium to long-term yields are sustaining significantly higher levels, around 50 to 60 basis points more than six months ago. While pricing on bank deposits typically lags behind, they tend to follow similar trends in the long run, which is encouraging. Internally, we're taking steps to ensure that the assets we manage, particularly those that are guaranteed, remain competitive. This has always been a core strength of our company, and we plan to enhance our efforts in this area. Our goal is to maximize the conversion from sales to cash, although we anticipate that yields will continue to decline for the rest of the year based on our guidance. Nevertheless, in the long run, the outlook appears positive. Lastly, having navigated this period of ultra-low yields, we are focused on optimizing our business operations, making necessary cost decisions, and building out our platform, all of which will yield significant benefits when yields return. We’re looking forward to the time when we can demonstrate the effectiveness of our current actions.

Great. Thanks so much. It seems like this might be sort of a floor for yields. Would you generally agree with that…

I think we…

...and fiscal 2023 should probably have higher yields, would you agree with that generally speaking?

What we’ve stated previously is that we are not providing any guidance for fiscal 2023 at this time. In terms of cash, we are still entering contracts at amounts lower than what they are rolling over to, which suggests that fiscal 2023 would be the third year of this trend. However, I am not in a position to elaborate on that further. We will share guidance for 2023 as soon as we are able. That’s about it. Tyson, do you have anything to add on this?

No. I think you got it.

Thanks very much. Congrats on a good quarter.

Thank you, David.

Our next question comes from Donald Hooker with KeyBanc. Your question please.

Good afternoon. I would like to hear your thoughts, Jon. One thing that stood out to me about the further acquisition is the ability to private label, and I’m trying to understand that better. Is that significant? Can you explain why someone would want a private label? I believe you attempted this in the past, and I’m curious if there’s something unique about what further is doing now that makes it more appealing. No. Thank you for the question, Don. Having been in the market for a long time, our goal is to align with our partners on how and when we distribute our services. Different partners have varying interests, sometimes wanting to integrate our product more deeply and other times preferring to maintain a level of independence. At HealthEquity, we mainly do not rely on private labeling; instead, it’s about how thoroughly we can embed our product into our partners’ services. We need to make strategic choices about our approach, knowing there are aspects we won’t pursue. We don’t sell software; we provide a service that is enabled by software. The collaboration with Further, facilitated through APIs, allows us to adapt to our partners' needs. Partners may want to pursue deeper integration at times and less at others, which presents a fantastic opportunity. This has been particularly relevant in the health plan segment, with some clients exploring this flexibility. I see potential for us to maximize our offerings while complementing our partners in meaningful ways.

And then maybe real quick, can you give us a quick update on your perspective on the employment picture at your employers. I think last year we were worried about unemployment.

Yeah.

Seems like things are raging back, is there a tailwind here for you guys? What’s in your guidance?

I believe our guidance reflects the overall macro consensus. Currently, I think the unemployment rate is decreasing more quickly than the employment market can grow, and this stems from two main factors. First, there are workers who are unlikely to rejoin the workforce, as the data suggests, or they will return very gradually when absolutely necessary or after exploring other options. There are likely about 3 million workers who may never come back to the job market, which is why the unemployment rate is falling faster than job creation. Second, there are significant disruptions in specific industries, which is a real issue that will require time to resolve. My main point is that we are closely aligning with the macro consensus, and this factor should indeed contribute to the recovery of the underlying market. If we can capture the same market share this year as we did last year in a recovering market, that would be excellent. However, it's important to recognize that the unemployment rates don't fully capture the situation; we are still around 5 to 6 million jobs short of the pre-pandemic levels. Therefore, there is still considerable work to do, and the progress from this point will be more challenging.

Thank you for your perspective.

Thanks, Don.

Our next question comes from Stephanie Davis with SVB Leerink.

Hey, Stephanie.

Hey, guys. Congrats on the quarter and the transactions and count me in on team shorts as well. It is very much...

All right.

Could you walk me through the change to your guidance and how we should we think about Luum’s impact to it and how much of that with all step by yields versus service revenues as you guys remain conservative on commuter versus maybe something else, some other bucket to compare with?

Yeah. Thank you Stephanie. How are you?

Hey.

Thank you for the question. When I consider the increase in our guidance, I reflect on our solid quarter coming out of Q1, which was positive despite still being affected by the pandemic, particularly regarding commuter issues. We are seeing spending returning, which is a good sign. Additionally, we have FSA accounts expiring due to timing and legislative changes, and we are also working on COBRA initiatives. It’s really about balancing all these factors to adjust our guidance upward a bit, and we believe that’s where we currently stand. There’s still much to learn throughout the rest of the year regarding how the business rebounds from this situation. Those are some of the factors I'm considering, but Jon and Ted, do you have anything to add?

No.

All right. Then, thinking about those pockets of upside that you could have. I was hoping you could double that more into the COBRA business and any kind of early influence you’re seeing on the recent policy change around reimbursement?

Yeah. There we’re particularly busy and so we did actually mean. So the team as Ted outlined made significant efforts to get in front of our clients and customers to help them be within the regulations and start to get off the commitments for the notification efforts that needed to occur and get those out and certainly we will generate revenue during Q2, mainly getting those out and then you’ll see the after effect of that and potentially the people who uptake COBRA. But there has been a significant from that you see the cost, you see the revenue that will come in Q2 and not necessarily going to get amounted some of that in the initial guidance and some of that now in this uptick in guidance here as well.

And it’s done. Thank you both.

Thanks, Stephanie.

Thank you. Our next question comes from Sean Dodge with RBC Capital Markets.

Sean.

Thanks. Hi. Good afternoon. Maybe going back to the acquisition the Fifth Third HSA, so 149,000 accounts holding $407 million of assets. Are there any other details you can share with us to help us understand the potential incremental revenue that’ll add their monthly account fees similar to HealthEquity? How much is invested versus cash? Any difference in the yields those assets are earning?

Sure. First of all, we will update our guidance upon closing the acquisition or in the next quarter shortly thereafter, and we encourage you to do the same. Typically, when we acquire portfolios, the per account fees are lower than the average per account fees for HealthEquity HSAs, as we usually rely on those more and because the average balance in this case is significantly higher, exceeding $3,000. That's one factor to consider. We will manage the assets to place them at the current prevailing yields when the time comes. The interchange rates are fairly typical for our accounts. Fundamentally, I would say that we'll aim to incorporate this into our guidance as soon as the deal closes, but the difficulty in doing so beforehand lies in the uncertainty of the closing date.

Got it. Okay. And maybe just quickly on COBRA, Tyson you said there was a little bit of activity revenue related to some of the notifications in the second quarter. If we think about the improving employment picture the employment recovery, does that impact your view on how many end up actually being in a position where they would need or opt to take COBRA or not?

We don’t think too many people are going to opt to take out. I think I would suggest it at the terrible early days, but not by us.

Not by all of us.

I’ll give this a try. This situation is one of the uncertainties that has influenced our guidance for the rest of the year, and it presents more complexities than usual. The truth is we don’t have all the answers, and when information is lacking, we forecast based on what we can observe. We’ve done our best to analyze both costs and revenues. Someone could argue that if everyone is employed, there’s some validity in that perspective. Ultimately, this situation isn’t going to determine everything in life. What matters most is that we’ll take care of those who need support, and we hope our clients see that we are committed to working hard for them, regardless of the impact on revenue or profitability.

Got it. Okay. That’s very helpful.

Thanks, Sean.

Thank you. Our next question comes from Mark Marcon with Baird.

Hey. Good afternoon and congrats on the quarter. I am wondering, if you can talk a little bit about with the increased number of deposit partners that you’ve talked to. How should we think about the typical premium that you’re going to get as it relates to the effective yield relative to say three-year to five-year jumbo CDs? How’s that looking now?

It's a bit challenging to assess right now because there's not much placement happening. We're in a stage where there's a lot of discussion, but real action won't occur until later in the year. I can say that securing a premium period depends on having competition for your funds and demonstrating a solid track record. Ultimately, these agreements aren't meaningful until the money actually changes hands. There are numerous discussions taking place with various parties. Unfortunately, the significant impacts will be felt in future years since most placements will happen later this year. However, we consistently put in a lot of effort each year, and having more opportunities to allocate those funds gives us increased optimism about reaping the benefits.

Okay. I mean just to follow-up on that, I mean, it does seem, you did say that current placements are coming in and an effective yield that’s less than what’s rolling off?

Sure.

Do you get the sense that the bottom end is starting to move up? As we consider the next year, not for the full year but sequentially, by the end of this year we’re likely getting closer to the bottom in terms of the effective yield?

I mean the gap has clearly narrowed in both directions, right? So I think you’re trying to ask if there been a narrowing on the other side, that is the demand side and the answer is, yes.

Okay. Great. And then interchange really picked up nicely. Can you talk a little bit about this the sequential monthly acceleration that you’re seeing there, because that looks, I mean, that’s where things were really strong relative to expectations. So can you talk a little bit about that just the pace of the rebound there?

Tyson?

Yeah. That was a real bright spot as we closed every single month we will see that things were largely normalized if not even a little better in some cases relative to the different places where people spend and particularly in the area of people going and getting medical procedures which was the one that was sort of lagged and the one that has the most amount of spend to be tracked. Yeah, we saw that there was pretty consistent. They walked through the quarter and so that was nice to see that, nice to see that was better than what we even expected. Of course the commuter interchange is clearly still not there.

Yeah. Great.

I would like to add that the interchange still has a seasonal aspect to it. For instance, in the first quarter, we benefit from accounts that are completing their grace period, which are from two years ago. However, we won't see this in future quarters, and it will be reflected in both total accounts and interchange. Additionally, people have been topping off their accounts at the beginning of the year, which is encouraging. Relative to pre-pandemic levels, it seems that healthcare spending has returned to where it was, but there will still be some seasonality in the second and particularly in the third quarter that should be considered as you plan.

Great. Look forward to talking again tomorrow.

Yes.

Thanks, Mark.

Thank you. Our next question comes from Sandy Draper with Truist Securities.

A lot but.

So well a lot of my questions have been asked, but maybe just following up on that, the comment about the stronger spend, we did note for the first time in a while we actually saw the cash per account was down sequentially been building, is that just because we’re starting to see some spend and just loved your thoughts on how you see that interchange of it. The interchange revenues going up, should we make sure we’re being taking the offset and added some of that money can be coming out of the cash balances?

Yeah. It’s a really important point, Sandy, thank you for making it. Look we’re thrilled with the aggregate balance growth just thrilled and thrilled that that is a function of not just market growth and primarily market growth, but also of growth, meaning net asset value growth, but also of people continuing to put more into the accounts than they’re taking out. And in case it could certainly have been made that we would see in this quarter balanced declines as people sort of began to spend again, we see that. So I think what’s the biggest thing that’s happening is just the continued move towards investing. And as we’ve talked about many, many, many times, while that has a tradeoff in terms of individual dollars, as we saw in this quarter, it also has the effect of people tending to put more money in and stick around and that money grows faster and so forth, but you know in the aggregate. So that’s good for the business. And I kind of relate it to a little bit to predictions about the long-term score for the sector as a whole to achieve its full potential. More people have to be looking at these long-term accounts and that’s going to be an investment balances grow quickly account balances and so seeing that at this level in this quarter, even in a quarter where we still have substantial increase in spend on a sequential basis seems pretty good.

Got it.

It is something that we all need to consider, and we have certainly tried to incorporate it into our thinking about guidance for the full year.

And we have...

Go ahead, Carmen.

Okay. We have a last question in queue gentlemen, Allen Lutz with Bank of America. Your question please.

Mr. Lutz?

Hey. Thanks for taking the questions. Going back to the service revenue, I guess, we know that the commuter segment is causing a big impact there. But historically you look at fiscal 2019 fiscal 2020 sequentially in fiscal 2020 that was down slightly. So can you just remind us as we think about the service line item heading to the second quarter, what are the puts and takes in addition to commuter there?

Tyson? Hi, Allen.

I believe this relates to how we evaluate deals and consider the amount of assets involved, including associated fees and the bundling aspect. When looking at HSAs and their relation to account balances, a good example is the Fifth Third deal and the number of accounts we’re acquiring, which presents significant revenue opportunities. This increases the sales volume, allowing that revenue to still be recognized in the financials. If you consider our custodial and service revenue categories, it’s beginning to appear as a blend, especially when focusing on that specific customer. This is particularly true when bundling sales and discovering ways to enhance profits by securing better pricing in the service fee sector, thereby improving our margins. I expect to see this trend continue, and as Jon mentioned, if rates can recover over the long term, it could create substantial opportunities for us. However, I don't anticipate a drastic decrease in the service revenue line item; we manage this carefully every day. I'm involved in signing off on those deals, considering negotiation and implementation details.

Got it. Thank you.

Thank you. And this concludes Q&A. I would like to turn the call back to Jon Kessler for his final thoughts.

Well, that’s all the insight I can provide for now. Thank you, everyone. I look forward to seeing some of you on video shortly and perhaps in person soon. Thank you all.

Thank you for participating in today’s program. This concludes the conference and you may now disconnect. Have a great day.