Thank you, Valerie. Good afternoon and welcome to HealthEquity's Fiscal Year 2022 Earnings Call. My name is Richard Putnam, Investor Relation for HealthEquity. And joining me today is Jon Kessler, President and CEO; Dr. Steve Neeleman, Vice Chair and Founder of the company; Tyson Murdock, Executive Vice President and CFO; and Ted Bloomberg, 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 fiscal year 2022 was issued right after the market closed this afternoon. The financial results reported in the press release include the contributions from our wholly-owned subsidiary WageWorks and the accounts it administers. The press release also includes definitions of certain non-GAAP financial measures that we will reference today, including recent definitional changes to those measures. 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, March 22, 2022, and we will talk about 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 our future 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 detailed on 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. After conclusion of our prepared remarks, we will turn the call over to Valerie to provide some instructions and she will also host our Q&A. With that, I turn the mic over to our CEO, Jon Kessler.

It's better every time, Richard. Hello, everyone and thank you for joining us. All together in-person, the whole crew here for the first time in a long time, which is really cool. Today, we're announcing results for HealthEquity's fiscal fourth quarter and for fiscal 2022 ended January 31st and we're providing guidance for fiscal 2023. I will discuss the FY 2022 results with Ted reporting on Q4 operational milestones. Tyson will provide financial details of fiscal 2022 and provide our fiscal 2023 guidance based on the results we're reporting today. And then Steve will join us for Q&A. Starting, as we always with our five key metrics. Fiscal 2022 revenue of $757 million is up 3% year-over-year, tempered by rate headwinds and the effects of the pandemic. Adjusted EBITDA of $236 million and adjusted EBITDA margin of 31%, both down slightly from fiscal 2021, reflecting the pandemic's impact on high margin custodial, commuter, and interchange revenues during the year. Record HSA sales and portfolio acquisitions helped HSA members grow to 7.2 million. HSA members ended fiscal 2022 with $19.6 billion in HSA assets, and we ended fiscal 2022 with 14.4 million total accounts. Beyond the key metrics, allow me to speak for a moment on FY 2022 highlights and opportunities for us to improve. Leading the highlights is the growth of the HSA core, continued double-digit balance growth. HSA members are up 25%, custodial assets are up 37%, HSAs with investments are up 37%, invested custodial assets are up 58%. This is delivery on the team's mission to connect health and wealth, and it's progress toward our vision of HSAs being as ubiquitous as retirement accounts, and we believe it is a significant durable contribution to the value of our enterprise. However, ancillary consumer-directed benefits delivered uneven performance in fiscal 2022. CDBs, as you know, are services within our total solution for employers, including FSA, COBRA, and commuter benefits administration. As Ted will discuss, the total solution bundle drove record HSA opportunities in FY 2022, but pandemic macro and regulatory factors in platform migration weighed on our CDB results and net growth. Now, many of these challenges are behind us. Fast HSA growth is reducing our exposure to standalone CDB performance, and we're exploring ways to accelerate that process. As a final note, the team launched innovations that we believe are game changers in fiscal 2022. Enhanced rates are raising custodial yields on HSA cash, customer-facing APIs are deepening product integration with network partners, and the prospect boost part of our engaged 360 platform is spurring new HSA adoption among our clients' employees. We have added technology leadership, including our new CTO, Eli Rosner, who arrived this week to drive these future innovations. I will now turn the call over to Ted to talk about Q4 operational milestones.

Thank you, Jon. Good afternoon, everybody. It is my pleasure to report the attainment of several key integration milestones. The WageWorks integration is substantially complete, with 20-plus migrations behind us and $80 million of annual run rate synergies achieved well beyond our initial goal of $50 million. Moreover, our hypothesis proved correct. We are a better partner to our clients, health and retirement plans, and other benefit administration partners when we offer the total solution bundle, and we were able to prove it through increased HSA sales. Team Purple, our partners and our clients helped HSA members open 918,000 new accounts in fiscal 2022, that’s 34% more HSAs sold a year ago and 27% more than our previous fiscal year record. Cross sales and bundled total solution sales grew 19% year-over-year. I could not be prouder of our integration efforts to which every member of Team Purple has contributed over the past 2.5 years. We continue to leverage our scale and proprietary platform and generate additional cross-sell opportunities from the HSA portfolios purchased from Fifth Third early in fiscal 2022. Just this month, we completed the acquisition of HealthSavings Administrators, and both of these migrations are completed. Integration of further is underway with an early focus on deepening relationships with our partners among Blue Cross/Blue Shield plans. As noted when we further closed, we now partner with a great majority of the Blue Cross/Blue Shield licensees. We will fully complete the carve-out of this business from the seller this year. Finally, I'd like to say a bit about service delivery during the just completed peak season. We entered Q4 concerned about our Purple teammates on the front lines of service due to the combined impacts of record growth and platform migrations, increased team turnover, and absenteeism from the pending federal contractor vaccine mandate and the Omicron variant delivering the highest infection rates of the COVID-19 pandemic across our workforce. What investors see as seasonally lower Q4 margins, we experience as remotely hiring, training, and equipping roughly 1,500 internal and external team members to help meet the peak season needs of our members and clients. Members, many of whom are new to HealthEquity, gave us high marks even on peak days. Clients experienced longer resolution times, and serving their disparate needs was challenging for new team members. We avoided the worst-case scenarios regarding team member attrition. While the peak is now behind us, we've had more to do in Q1 than in other years and more peak season staffing and other costs to wind out. We've adopted a conservative Purple approach to this process prioritizing service. Tyson will discuss the implications for seasonality and margin in a moment. I'd like to conclude with a huge thank you to our teammates who have worked so hard, as well as our broker, consultant, and network partners who worked tirelessly with us to serve both our clients and members. Now, I will turn it over to Tyson to talk about our financial results and outlook.

Thank you, Ted. I will review our fourth quarter GAAP and non-GAAP financial results. A reconciliation of GAAP measures to non-GAAP measures is found in today's press release. Fourth quarter revenue increased 8% even as the economic effects of the pandemic negatively impacted each of our three revenue categories and included the benefit of further. Service revenue increased 1% to $112.5 million, representing 55% of total revenue in the quarter. Strong growth in HSA has helped average total accounts grow 13% year-over-year, while CDBs grew 2% year-over-year benefiting from acquired and new open enrollment accounts that start in January. Custodial revenue grew 24% to $58.1 million in the fourth quarter, representing 29% of total revenue in the quarter. The 25 basis point year-over-year decline in the annualized yield on HSA cash with yield assets was offset by 33% year-over-year growth of average HSA cash with yield and 60% growth in average HSA investments with yield in the quarter. The annualized interest rate yield for Q4 was 172 basis points on HSA cash with yield and 175 for the year. This yield is a blended rate for all HSA cash with yield. The HSA assets table in today's press release provides additional details. And as previously mentioned, we will not be breaking out HSA assets without yield going forward. Interchange revenue grew 16% to $32.8 million, representing 16% of total revenue in the quarter. The interchange revenue increase was primarily due to HSA spending associated with 25% year-over-year growth in HSAs. Gross profit was $105.3 million compared to $100.9 million in the fourth quarter of last year. Gross margin was 52% in the quarter and 56% for the year. Service costs were higher in the quarter as we ramped up to welcome over 900,000 new HSA members from this year's selling season and from the further Fifth Third and HealthSavings administrator acquisitions with an additional 827,000 new HSA members. Net loss for the fourth quarter was $32.8 million or $0.39 per share on a GAAP EPS basis compared to net income of $5.4 million or $0.07 per share in the prior year. Our non-GAAP net income was $17 million for the quarter compared to $34.6 million a year ago. Non-GAAP net income per share was $0.20 per share compared to $0.44 per share last year. Adjusted EBITDA for the quarter decreased 11% to $50.4 million and adjusted EBITDA margin was 25%. Fourth quarter adjusted EBITDA margins were impacted by service cost runs, as Ted discussed. For the full fiscal year, revenue was $756.6 million, resulting in gross profit of $423.7 million or a gross profit margin of 56%. Loss from operations was $24.2 million and adjusted EBITDA was $236 million or 31% margin. Turning to the balance sheet, as of January 31st, 2022, we had $225 million of cash and cash equivalents, with $930 million of debt outstanding net of issuance costs, which is a $56 million reduction in debt from fiscal 2021. The company's $1 billion line of credit remained undrawn at fiscal year-end. The year-end cash balance, of course, includes roughly $60 million used in the HSA Administrators acquisition, which closed on March 1st and will be reflected in Q1 of fiscal 2023. Based on where we end fiscal 2022, we now expect the following for fiscal 2023. We expect to generate revenue for fiscal 2023 in a range between $820 million and $830 million. We expect our non-GAAP net income to be between $102 million and $110 million, resulting in a non-GAAP diluted net income per share between $1.21 and $1.30 based upon an estimated 84 million shares outstanding for the year. We expect HealthEquity adjusted EBITDA to be between $245 million and $255 million for fiscal 2023. Today's guidance includes our most recent estimate of service custodial and interchange revenue based on a successful fiscal 2022 selling season and early fiscal 2023 results. Guidance assumes a yield on HSA cash with yield of approximately 160 basis points. This includes the benefit of last Wednesday's decision by fed officials to raise the benchmark fed funds rate. Importantly, as is our practice, today's guidance does not factor in further changes in monetary policy, such as widely expected additional fed rate hikes or increases from the recent placement rates on our HSA cash. These would have a positive impact on revenue and income. However, most of our HSA custodial cash is deployed in multiyear fixed-rate instruments. Therefore, between 5% to 10% of HSA cash plus CDB client-held funds are deployed in variable rate instruments tied to LIBOR. Policy-driven rate increases this year will provide a greater lift in fiscal 2024 and beyond. We have assumed a measure of continued mix shift from deposit products to our enhanced rates offering over the course of fiscal 2023 in our guidance. Our term loan A is also connected to LIBOR, and interest expense associated with it will increase with future fed rate hikes. Our revenue guidance assumes that revenues from commuter benefits will remain depressed with only very gradual and modest improvements throughout the year. Guidance assumes no new variant impact that may cause further disruptions. With respect to healthcare spend and its impact on interchange revenue, we assume per account spend at about fiscal 2022 levels. With healthcare services remaining broadly open to our members, we assume the normal roll-off of prior year FSAs in the first half of fiscal 2023, as normal grace and runoff periods close for calendar year FSAs. We assume no additional COBRA subsidies in fiscal 2023, such as what we benefited from in fiscal 2022, and with full employment, COBRA uptake rates will remain subdued. Our guidance reflects the effects on depreciation and amortization expense of increased capitalized technology and development spend in recent years, as can be seen in our fiscal 2022 and historical statements of cash flow. As you know, we don't provide quarterly guidance. However, I want to highlight that we expect results to differ seasonally from past years. Specifically, we expect to deliver a smaller share of full-year profits in Q1 and conversely a larger share in the second half than historical patterns would suggest. This is because we will incur $5 million to $7 million of expense, primarily in Q1 due to maintained elevated servicing capacity in Q1, in response to record sales volume, portfolio acquisitions, platform migration activity, and pandemic-related attrition and other risks. To be clear, these expenses are reflected in our full-year guidance. The outlook for fiscal 2023 assumes the projected statutory income tax rate of approximately 25%. As we have done in recent reporting periods, our full-year guidance includes a detailed reconciliation of GAAP and 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, Tyson. I want to just put an exclamation point on comments that both Ted and Tyson made regarding the peak season activity that we've gone through in the last three or four months and are now starting to wind down. This has been a really unusual season with a combination of record sales and the incredible effort on completing substantially the WageWorks platform migrations for CDBs, all done within the midst of Omicron and illnesses and trying to keep our team members safe, healthy, and happy, and retained. And it was pulled off. There’s no one person who's responsible for that, but I want to take a moment to thank both our team and our partners, our partners for being patient and reasonable with us and our team for its determination to be Purple and do Purple, notwithstanding the challenges that we faced during this period. So, thank you to everyone. And with that, let's open the call up to questions.

Thank you. Our first question comes from Anne Samuel of JP Morgan. Your line is open.

Hey, guys. Thanks for taking the question.

Hi, Anne.

Maybe you could provide a little bit more color on the EBITDA guide, and what are the headwinds and tailwinds embedded within that guidance?

Yeah. And so, I just pointed out in the script, right, the $5 million to $7 million, that's going to come in Q1. So that is definitely embedded within guidance. And that really, again, relates to the fact that we have had portfolio acquisition going on, record sales. We were completing all the migrations of the CDBs. We had the vaccine end date, and the increasing attrition over that period of time. So, there were a lot of factors going into that. So that just runs over into the current year. And that hasn't been the case, Anne, in other years. So, I wanted to point that out specifically related to that $5 million to $7 million. Then if you think about the puts and takes for the rest of the year, of course, we haven't built into our guidance the fed rate increases that you hear about every single morning when you turn the television on. So, you hear about those, those aren't baked, and we baked into 25 bps. And as you know, we would get a tailwind from increasing rates on that variable portion of our portfolio, which is around $1 billion, just under. And so, you can kind of do the math on a basis point increase like that. So that, of course, would be a tailwind into that guidance, but not included in the guidance. I think the other factor that you'd want to take into account, we've said this a lot of times before so I kind of being repetitive, is that we don't have the COBRA subsidy in this current year. And so that was a $10 million revenue upside in the prior year as a comparable to this year. So, you have to take that into account as well. I think I'll stop there. Jon, anything would you like to add?

I want to emphasize that while we are experiencing some optimism regarding rates, it's important to recognize that when comparing fiscal 2023 to 2022, rates still pose a challenge in our guidance for fiscal 2023. This influences our overall financial performance. Currently, we have $13 billion in cash and the expected impact from rates has shifted to about 15 basis points. This translates to a headwind of nearly $20 million in fiscal 2023 when compared to the previous year. However, as we mentioned back in December and as has become increasingly evident, we believe this situation is changing for the better, and our cash balances are on the rise. This trend is likely to serve as a positive factor for us moving forward.

That's really helpful. And then, maybe if I could just ask one follow-up to that. Now that WageWorks is fully integrated, you've captured all the synergies from that. How should we be thinking about what kind of normalized margin expansion should look like going forward?

You want to start with this one?

Sure. I believe the reason we acquired that was due to the CDBs, the cross-sell opportunities, and the bundle. This strategy has contributed to an increase in our new sales this year, in our view. However, I also anticipate margin expansion as custodial rates improve over time and as we implement changes in how we manage assets within the enhanced rate products. We are making progress towards that goal. Currently, we have over 10% participation in those programs, and we can typically allocate acquisition cash into them. We will keep pursuing this as opportunities arise.

Yeah. I think that’s right.

Great. Thank you.

Thanks, Anne.

Good afternoon, Team Purple.

Hello.

Glad to hear that you're all in person.

We are back with one part though, Greg. We're back to like the old rules are back in place.

I didn't hear that. I think you're just picking on me, Jon. I believe you're applying that rule specifically to me. Let's be honest. I know you mentioned some of this earlier, but I want to highlight two areas of expenses in the income statement. I'm looking at the annual figures for sales and marketing, and technology development as a percentage of total revenue. Observing the trends for both in the income statement, they have increased from fiscal year 2021 to 2022, especially technology development, which has seen a significant rise. It seems you're forecasting that these percentages might increase again in 2023 compared to 2022. Can you explain what's happening with these two line items and your thoughts for 2023?

Sure, I'll begin. There are two key points I want to address. First, we will base our T&D expenses on the potential for return. When we consider our innovation efforts, I believe that return is both present and will continue. From a numbers standpoint, the primary factor behind your observation is the increased CapEx that is impacting the income statement. I’d like to hand it over to Tyson to elaborate on this, as we've discussed it previously, and then I’ll return to the topic of sales and marketing.

Sure. A good reference for this is in the cash flow statement, particularly in the investing section regarding the capitalized development line item. It aligns well with our investment trends. You can observe how back when we were a smaller company, the figures were lower. After we acquired Wage, that number essentially doubled over time. It then increased again last year as we enhanced our platforms significantly. This growth is evident, and it gets reflected in the technology and development expenses. Thus, you see that investment continuing to be evident. I believe that's the main highlight, and as Jon mentioned, we won’t proceed with such initiatives unless we anticipate a strong return on investment.

We are experiencing increased sales and marketing expenses simply because we are a larger company now. Moving forward, we are focused on enhancing sales through our partners, which comes with added expenses. This has been a significant factor in our current situation. I recall past earnings calls where questions were raised about our spending levels in sales and marketing. The increase in sales we have seen can be largely attributed to this strategy. However, I do not foresee the trend of rising sales and marketing expenses continuing indefinitely; it will depend on the returns we see. In terms of technology and development, we still have some aspects to consider regarding amortization. Your observation is likely correct, and this is our perspective on the matter.

You certainly have a knack for illustrating your points. This will likely resonate for the remainder of the day. However, I believe this is all reflected in the stock-based compensation guidance you provided for fiscal year 2023. The projected figure for fiscal year 2023 is significantly higher than that of 2022. I was looking to understand the factors contributing to this increase. Sales and marketing appears to be steady, possibly with a slight uptick. Tech and development also saw an increase, similar to last year. What is driving the projected figure for fiscal year 2023 compared to what you reported for 2022?

You want to start on that, and then I will come.

One aspect to consider is how we compensate our employees, particularly through performance RSUs. When we conduct our simulations for valuing these, the amounts tend to be significantly higher. This valuation remains fixed, which creates alignment between our interests and those of our investors, as we aim for the stock value to rise, reflecting our performance. This is also relevant to leadership compensation. Furthermore, if we look back at our growth, we had fewer than 1,000 employees about two and a half to three years ago, and now we have 3,500. This substantial increase means that while not everyone receives equity, a significant number do, contributing to the overall increase.

I wanted to emphasize that we're discussing this topic because we recognize its importance. It's not just about percentage increases; we focus on metrics like burn rates, which have been reasonable. However, we can't simply congratulate ourselves and move on. This remains a key area of discussion, and managing it involves three main factors. First, as Tyson pointed out, I want to clarify my own situation—my compensation consists entirely of PRSUs, which are valued when granted regardless of whether they're ultimately earned or their value at that time. I find it confusing why accountants do it this way, but that is the process. This can significantly impact the price of those awards. The second point I want to raise is that we are making substantial investments in strengthening our technology organization as we continue to see returns from our tech transformation efforts. In our fiscal 2023 guidance, we have accounted for some of these expected expenses. These hires typically come with high equity compensation, which contributes to the overall picture and likely explains a large portion of the variance we're seeing.

Got it. Well, I don't want to overstay my welcome and then Richard calling me later. So, I'm going to stop there and thank you for answers.

He's never called you. Has he?

Come on. I get a call every once in a while.

Richard is the enforcer. He just does that. We have plausible deniability. Okay.

Hey. Good afternoon, guys.

Hi, George.

Good afternoon, Jon and team. Thank you for taking my question. I have about fifteen questions prepared, but I need to choose just two or three. I’d like to ask about the general return of labor—specifically, the mix of HSAs and the individuals who are re-entering the market. Considering the strong sales you experienced heading into calendar 2022 and fiscal 2023, do you think the mix continues to improve? Are more people adopting HSAs compared to the previous cohort?

Ted, why don't you address this because it relates to what we're doing technologically and what the market is requesting from us as new clients come in to increase HSA adoption.

I would like to make a few points. It's a bit early in this year's sales cycle to determine the exact split between HSA, FSA, and HRA plans. Our commitment to the market is to meet people where they are, to welcome them into our family, and to demonstrate the value of HSAs over time, which is what we are continuing to do. Our sales season has started strong this year. There’s nothing noticeably different about the mix of HSA and non-HSA compared to previous years. However, the real opportunity lies in improving how we communicate with our existing clients about planning design and encouraging their employees to adopt and maximize benefits. The market is asking us to help them leverage their benefits as a competitive advantage and ensure benefits are utilized effectively. Our marketing team has excelled in driving high retention rates in HSA plans, which is encouraging to see and a couple of percentage points higher than before.

That's the way it grows as you start by keeping the people you have.

I realized I may not have asked my question clearly. What I wanted to simply ask was about the increasing demand for employee retention due to the tight labor market. You had a very strong sales period heading into 2022. As many are focusing on benefits to retain employees, it seems that your selling season indicated that HSAs are the answer instead of enhancing benefits in other ways. This is more of a comment than a question. I would like feedback on why employers believe that HSAs contribute to employee retention or at least play a part in it, as that relates to benefit design.

What it ultimately comes down to is that we've discussed before the similarities between HSA qualified health plans and standard PPO plans. In many instances, they are intentionally designed to have comparable actuarial values. You might remember we referenced some market research on this subject during either our last call or back in December. Consequently, from the employer's viewpoint, focusing on meeting the requirements for those plans to qualify as HSA can be quite advantageous, especially in the mid-market sector. It raises the question of why employers wouldn't pursue this option, as it offers a better benefit with similar actuarial value. Additionally, as Ted pointed out, the growing number of employees who have experienced HSAs at previous jobs adds another dimension to this trend. The current labor market, while tight, also features significant movement of personnel, and those who understand the benefits of an HSA want to keep that option. This situation has prompted benefits departments to adopt HSAs more proactively, viewing them as a desirable option rather than a mandated requirement. While not everyone will have an HSA—just as not everyone has a 401(k)—the trend is shifting towards the acceptance of HSAs as valuable, making them an attractive choice that employees want to retain.

Okay. That's helpful. And, Jon, I would just mention that there have been some concerns about whether employers would work harder to retain employees and if the HSA would benefit or suffer from that trend. It looks like it will benefit.

Yes.

And then, two quick housekeeping questions for Tyson. On the no COVID subsidy benefit in 2022, you talked about a $10 million benefit last year. Can you talk about what the margin profile on that is?

Yes. With the COBRA subsidy, I don't think we've discussed it with the market before. We mentioned $10 million to $12 million in revenue, but we haven't specifically addressed it.

Yes, we didn't talk about that.

Yes, we mentioned the average. I would say the average is around that.

It wasn't very profitable. It wasn't like that.

It was hard work, yes.

And the other housekeeping question is, I thought you said the most recent rate hike was explicitly included in the fiscal 2023 guidance. I guess can you flesh any more color around what is explicitly included in the guidance from the most recent hike? And then I will be quiet.

Yes. So with the COBRA subsidy, I don't think we've ever talked about them with the market.

Yes, we didn't talk about that.

Yes, we mentioned the average. I would say it is.

It wasn't very profitable.

It was hard work, yes.

I think that helps. Thank you very much.

Yeah, thank you.