Healthequity, Inc. (HQY) Q2 2024 Earnings Call Transcript

Hello, everyone, and welcome to the conference. Please note today's conference is being recorded. I'd now like to turn the call over to Richard Putnam. Please go ahead.

Thank you, Rocco. Hello, everyone. Welcome to HealthEquity's Second Quarter of Fiscal Year 2024 Earnings Call. My name is Richard Putnam, Investor Relations for HealthEquity. Joining me today on the call is Jon Kessler, President and CEO; Dr. Steve Neeleman, Vice Chair and Founder of the Company; the Company's CFO, Tyson Murdock; and soon-to-be CFO, James Lucania. Before I turn the call over to Jon, I have two important reminders. A press release announcing the financial results for our second quarter of fiscal 2024 was issued after the market closed this afternoon. These financial results include the contributions from our wholly owned subsidiaries and accounts that they administer. 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, September 5, 2023, and will contain forward-looking statements as defined by the SEC, which include predictions, expectations, estimates, or other information that might be considered forward-looking. There are many important factors relating to our business that 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. We caution 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, as they are detailed in our latest annual report on Form 10-K and subsequent periodic reports filed with the SEC. We assume no obligation to revise or update these forward-looking statements in light of new information or future events. One more note before turning this over to Jon: we have rescheduled our Draper Investor Day to February 22. We're hoping for another great year of snow for those who want to ski on the greatest snow on earth. And we hope all will join us either in person or virtually. Over to you, Jon.

Okay. Hi, everyone, and thank you for joining us. I will discuss Q2 key metrics and management's view of current conditions. Tyson will touch on Q2 results before detailing our raised guidance for fiscal '24, and Steve is here for Q&A. In Q2, the team delivered double-digit year-over-year growth in revenue, which was plus 18%, and adjusted EBITDA, which was plus 31%. HSA assets grew 13% and HSA members grew 9%. Total accounts grew 3%, muted by the previously discussed change in COBRA methodology. HealthEquity ended Q2 with 8.2 million HSA members, $23.2 billion in HSA assets, and 15 million total accounts. The team added 156,000 new HSA members in its fiscal second quarter, which is healthy but down from the record-setting Q2 last year. As in Q1, comparisons to last year's blistering job growth and high turnover, as well as fewer transfers from small banks, were offset by robust new logo growth driven by an expanded network partner footprint and HR departments seeking out win-wins. The team also added $883 million in HSA assets in Q2. That's compared to a $272 million increase in the year-ago period, which would not be as remarkable, reflecting not only count growth but also balance growth. Despite inflation, average HSA balances at HealthEquity grew both sequentially and year-over-year, in part due to investment. Eleven percent more of our HSA members became investors year-over-year, helping to drive up invested assets by 23%. Remarkably, invested assets now account for 40% of HSA assets. We continue to see more members choose enhanced rates for their HSA cash, leading to higher for longer custodial yields, and we believe less cyclicality in the future. Interest rates in Q2 also gave a boost to variable rate HSA cash and CDB client funds. While custodial fee growth drove Q2 performance, the team also delivered modest progress on service fees, the bulk of which come from ancillary CDP administration products. Service revenue rose 3% year-over-year, in line with total accounts. Service costs grew just 2% year-over-year and declined sequentially by more than $4 million. Rapid improvement in service tech continues to drive more interactions to chat and automated responses. The runout of remaining tailwinds from the COVID-19 national emergency may obscure the progress we're making when we get to the second half, but we see the results we've delivered here in Q2, as well as in the first quarter, as evidence of a positive trajectory on service revenue and margin. Finally, interchange revenue resumed its seasonal pattern as expected, with strength in Q1 followed by a more subdued performance in Q2. We think the HSA market that HealthEquity now leads can grow by about 10% annually for years to come, thanks to steady account growth and faster asset growth as accounts mature, which in turn expands margin opportunity. Team Purple can extend its long record of outperformance by doing what it did well in this second quarter. Before turning the call over, I would like to publicly thank Tyson Murdock for his unwavering service to HealthEquity's mission, vision, and values over the past 5.5 years, and in particular, for focusing his team on a strong finish and a smooth transition over these past few months. Tyson's a class act, and you would do well to keep an eye out for the opportunity in whatever he chooses to do next. As Richard noted at the top of the call, Jim Lucania, who will take over as CFO effective tomorrow, is with us today. Jim will be active on the conference circuit this fall, beginning tomorrow, actually, and of course, will preside over HealthEquity's Investor Day in Utah in February, as Richard mentioned.

All right. Thank you, Jon, for those kind comments. All right. I'll highlight 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. Second quarter revenue increased 18% year-over-year. Service revenue was $105.7 million, up 3% year-over-year. Total revenue grew 51% to $98.9 million in the second quarter, and the annualized interest rate yield on HSA cash was 237 basis points. Interchange revenue grew 4% to $38.9 million. Gross profit as a percentage of revenue was 62% in the second quarter of this year versus 57% in the year-ago period. This is the highest gross margin quarter since we acquired WageWorks four years ago. Net income for the second quarter was $10.6 million or $0.12 per share on a GAAP EPS basis. Our non-GAAP net income was $45.6 million for the second quarter, and non-GAAP net income per share was $0.53 per share compared to $0.33 per share last year. While higher interest rates increased custodial yields and generated interest income, they also increased the rate of interest we pay on the remaining $287 million Term Loan A to a stated rate of 6.9%. Adjusted EBITDA for the quarter was $88.1 million, and adjusted EBITDA as a percentage of revenue was 36%, a more than 360 basis point improvement over last year. For the first six months of fiscal '24, revenue was $488 million, up 18% compared to the first six months of last year. GAAP net income was $14.7 million or $0.17 per diluted share, and non-GAAP net income was $88.4 million or $1.02 per diluted share, up 74% compared to the same period last year. Adjusted EBITDA was $174.7 million, up 39% from the prior year, resulting in adjusted EBITDA as a percentage of revenue of 36% for the first half of this fiscal year. Turning to the balance sheet. As of July 31, 2023, cash at quarter end was $290 million, boosted by a record $77 million of cash generated from operations in Q2 and $109 million year-to-date. The company had $874 million of debt outstanding, net of issuance costs, and we continue to have an undrawn $1 billion line of credit available. For fiscal '24, we're raising guidance and now expect the following: revenue in the range between $980 million and $990 million, GAAP net income to be in a range of $19 million to $24 million, and we expect non-GAAP net income to be between $171 million and $179 million, resulting in non-GAAP diluted net income between $1.97 and $2.06 per share based upon an estimated 87 million shares outstanding for the year. We expect adjusted EBITDA to be between $338 million and $348 million. Our $5 million midpoint revenue increase is primarily based on revised expectations for the average yield on HSA cash to approximately 240 basis points for fiscal '24. As a reminder, we base interest rate assumptions embedded in guidance on an analysis of forward-looking market indicators such as the secured overnight financing rate and mid-duration treasury forward curves and Fed funds futures. These are, of course, subject to change. Our expectations are tempered somewhat by the anticipated impact of the end of the national emergency period that Jon referenced in his remarks on service revenue. Average crediting rates our HSA members receive on HSA cash remained flat sequentially, and the crediting rates our HSA members receive are determined in accordance with the formula described in our custodial agreements with them. We continue to expect these rates will rise as overall interest rates remain elevated and have included in our guidance, a 5 basis point increase by the end of fiscal '24. Our guidance also reflects the expectation of higher average interest rates on HealthEquity's variable rate debt versus last year, partially offset by the reduced amount of variable rate debt outstanding. We assume the projected statutory non-GAAP income tax rate of approximately 25% and a diluted share count of 87 million, which now includes common share equivalents as we anticipate positive GAAP net income this year. As we have discussed, moving to positive GAAP net income impacts our GAAP tax rate strangely this year. Discrete tax ends may also impact the calculated tax rate on a low level of pretax income. Based on our current full year guidance, we expect roughly a 50% GAAP tax rate for fiscal 2024. As we have done in recent reporting periods, our full fiscal 2024 guidance includes a reconciliation of non-GAAP to the non-GAAP metrics provided in the 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 intangibles is being excluded from non-GAAP net income, the revenue generated from those acquired intangible assets is not excluded. My time serving our members, our teammates, and investors over the last 5.5 years has been a real pleasure. We made a lot of progress, and I'm confident the team will continue the course as I move to my next opportunity. And with that, we know you have a number of questions, so let's go right to our operator for Q&A.

Thank you. Today's first question comes from Greg Peters at Raymond James.

I guess before I begin with my question, Tyson, I'd also like to congratulate you on your service at HealthEquity, certainly helping the company through some challenging times. Jon, in your prepared remarks, you mentioned something about sustaining a 10% growth. I was just curious about your perspective on the macro environment from a competitive standpoint. You're seeing numbers from Dubner and others, and some are having some success, maybe as much success in growing share as you are, while others are not. Just an updated view on how the market looks to you today.

I believe that when considering the market, there are two key factors driving revenue growth, which is a primary concern for investors. The first factor is account growth, and the second is asset growth. Looking at account growth over a multi-year period, I anticipate it will be in the high single digits, while asset growth is expected to be in the teens. Revenue growth usually falls between these two figures. I don't foresee any major changes to this outlook based on my long-term assessment. Our goal is to outperform the market regarding assets and accounts, and to excel in generating both revenue and profitability.

All right. My follow-up detailed questions on free cash flow. Nice improvement on a year-over-year basis; it looks like the gap between adjusted EBITDA and free cash flow is narrowing. Maybe you can just update us on how you're looking at free cash flow for the balance of this year? And are there any headwinds that we should be thinking about concerning free cash flow as we think out beyond this year?

Tyson, could you start by addressing the question about the balance for this year? Specifically, has there been a significant change or improvement?

No. I mean I think this is to be expected as the custodial revenue increases with the very high margin and cash generation capability; we know that it's going to accelerate that cash. And as you see, the positive GAAP net income come in, it's overcome now all the amortization from the WageWorks and other deals that are in there. So the business is starting to purely generate custodial cash, and I'd expect that to continue going forward. Of course, there are things in there like we're going to start to pay taxes. So you will see that reflected. And other than that, I don't foresee huge changes that would cause other things to occur. So it's going to continue to move up.

And Greg, as far as the use of cash, first of all, it's worth noting that if we do nothing, over the course of multiple years here, and it's not too many. The free cash flow is basically going to eliminate our leverage. And we're very comfortable with current leverage. I don't want anyone to take my statement as suggesting otherwise. But that's probably not what's going to happen, meaning we will want to look at using that cash as we have in recent quarters. From my perspective, in terms of order of cash utilization, there are portfolio transactions that we like because they are reliable ROI. We've also paid down a little bit of our term A. I would expect that where portfolio transactions aren't available or where it makes sense, we'll continue to do that. It’s worth noting that within the current envelope, we’ve committed to investing in organic innovation. You’re starting to see pieces of that come through, and you will see more pieces of it come through. It’s helpful when we get a question, as I’m sure we will later about T&D expense and the like that we’re able to do that within the envelope we have while bringing T&D expense as a percentage of revenue down over time. Thanks, Greg. Have a safe flight.

And our next question today comes from Stan Berenshteyn with Wells Fargo.

Thanks for taking my question. I have a couple of questions. First one on your sales pipeline. Any changes in the RFP volumes you're seeing? Any changes in your win rates, or perhaps what employers are looking for?

Yes. The most significant observation this year is that, similar to our first quarter remarks, we're seeing a decreased macroeconomic tailwind, including factors like new job creation. However, there has been an increase in new account onboarding, and crucially, we're building a strong pipeline for fiscal Q4, set for January. This influx is somewhat offsetting the challenges we face. Notably, for the first time since the pandemic, the enterprise pipeline appears very strong. I'm usually cautious about making claims without supporting data. One potential explanation is that people now feel more empowered to make changes they previously hesitated to make. Nevertheless, the key point I want to highlight is the increased volume of enterprise deals we are securing, which aren't just comparisons on price; we're successfully winning business from competitors as well as capturing new opportunities.

Got it. That’s helpful. And then one more on custodial assets. Can you get an update on the current mix of assets that are in enhanced yields? And where do you expect that mix will be 12 months from now?

We've given guidance for the guidance maybe the wrong word. We’ve said that we'll hit about 30% by the end of the year, and I think we'll end up doing a little better than that. It is true that, at this point, one of the limiting factors that we're working with is the timing of roll-off of our deposit contracts and barriers as well as appropriate education of consumers. I guess I would say that, in general, the enhanced rates program is moving at or above the pace we’ve discussed. We believe the end result of this is going to be a higher rate as well as ultimately less cyclicality because of the features that we've been able to design into this product. I'm really excited about where we're headed with it and I’m excited to have Jim take a look at it and see where he can add and improve; we’ll have more to say about it as we go in the next couple of quarters.

Thank you. And our next question today comes from Glen Santangelo with Jefferies.

Just two quick ones for me. Jon, could you give us an update on the average duration of the portfolio and if that's changing at all with this enhanced rates product because I think, as most of us are probably aware, the 10-year was sitting at 65, 70 basis points three years ago. So you're getting ready to do a replacement coming up here in a few months, and I was kind of curious if you could help us think about the waterfall. And then I just had a follow-up on margins.

In general, we have not made any change with regard to the fundamentally regarding the approach we take to the duration of our cash portfolio. I think that's fundamentally what you're asking. By cash, in particular, I mean our deposit portfolio, right? We deploy the actual contracts that are deployed or four- or five-year contracts. When you consider that there’s variable rate cash and there’s money above the minimums, you’re really talking about liquidity-related duration that's around 3 years. There are a couple of things, and I think generally, the premise that your question suggests is that over the next couple of years, there's a lot of cash that will be running out of deposit contracts and particularly to the extent that we're placing enhanced rates is going to produce a nice bump here.

Right. I mean just to use your words, Jon, you said there's a bump coming, and I just want to make sure I'm correct in thinking that there is a bump coming even if you don't want to size it today because when we go back and we look at those consort of cash rates, I mean, it’s pretty clear there's a big bump coming.

Yes. It is the custodial revenue obviously falling down to the model, and we did hit a 40% EBITDA margin in one of the quarters in the middle of the summer, like this one. We’re moving back towards that as it moves up. But I do think that we've been very thoughtful about how we've managed controllable costs.

Awesome. And best of luck, Tyson.

And our next question today comes from Sean Dodge with RBC Capital Markets.

Sure. Thanks. Maybe just going back to the enhanced product. And just to further clarify how those work. I know, Jon, you said you placed cash in those for five years, but you've also said before they're designed to produce more smoothness in yields over time. Should we think about these being more like a variable rate product? Or is that smoothness coming more from the fact that these are layered in over the course of the year and not all happening in lumps around the January timeframe? And so, as these roll off on their five-year ladder, it's happening more intra-year instead of in January. That’s where the movement is coming from. Could you help clarify that?

The answer is there are really three sources of this. We thought quite a bit about this as we worked through these products. The first is the second point you mentioned: the ability to layer money in for lack of a better term. When you do deposits, you strike the deal, and you send all the money, and that's it. Here, you have that ability. That does really help us. The second factor is that the variable cash we need to maintain liquidity is built into the instrument. The third factor is some stuff that is internal to the contracts that is really designed to provide a little bit of trade-off between rate and non-cyclicality. We recognize that it's not in the interest of our investors to be exposed to deposit products exclusively. And so, while there will be ups and downs, there will also be less variability with short-term changes in interest rates.

Okay. And then you said the goal is to transition 10%, give or take, of the deposits to these; it sounds like you're tracking at or slightly better than that. Is that still the way we should be thinking about that over the longer term? Or are there opportunities out there at some point to start to accelerate how quickly you transition cash?

So what I’m asking me to tell you otherwise, that’s the way you should think about it.

Thank you. And our next question today comes from Scott Schoenhaus with Stephens.

Can you hear me? On a personal note, Tyson; it’s been a pleasure working with you. Most of my questions have been asked. I just wanted to drill down on the service fee side. How much of that growth was driven by slightly raised fees versus the underlying improvement in like commuter CDB? If you could break out any differentiation, that would be great.

Service fees, particularly if you look at it, I believe, grew slightly faster than total accounts. This is a little tricky because most service fees come from CDBs and the like. I would say that the bigger issue here was volume-driven. We are starting to see some of the rate increases that we put out there and talked about in the first quarter start to come through. We'll see a little more of that particularly as we get into the beginning of fiscal '25 as a critical factor. Of course, we hope that volumes are up as well. But for the moment, what you're seeing is more volume-driven on the top line.

Great. That’s great color. And then just on the balance sheet, like $290 million of cash? Anything changing in the M&A environment versus 90 days ago?

We commented 90 days ago that we felt like, given the proximity to the deposit crisis on the bank side, yields weren't likely to go down. That's why we went ahead. If you recall, at the end of April, we started to do a partial paydown on our term A. But I should say Tyson did the math, and he showed it to me, and I said no, like five times, and he kept showing it to me, and he was right. There are a few transactions announced primarily in areas where HSA is a piece of the business but not the whole of the business. You've seen a few of those. The fact that our move to enhanced rates, along with our increased investment, will raise barriers to staying in the market. Over the next while, you may see one or two of the larger players break free. We're pleased to be in a position to do those transactions. From a shareholder perspective, these start cash flowing on day one, and you're not having to deal with synergies and all that with other transactions; so that's better.

And our next question today comes from Allen Lutz with Bank of America.

I guess one for Tyson. As we look at the custodial revenue, I went back and looked at custodial revenue really since the IPO, and it goes up basically every quarter, only in fiscal '21 did it really ever dip. I wanted to talk about the components of the about $4.5 million increase sequentially in custodial revenue in the quarter. Can you just talk about what are some of the drivers of that? And then should we see some of those sequential drivers impact revenue going from 2Q to 3Q this year?

Yes. We have some deposits that occur in the middle of the year, which are smaller, Alan. So we make adjustments there. As we feed money into enhanced rates, we have to make sure we operate within parameters on the deposits on the FDIC side, but we could continue to feed dollars into the enhanced rate program as we accelerate as well. We've also continued to do better on how we monetize client-held funds against the rate environment currently available to us, and I give credit to our new treasurer; he's making improvements. All of that together drives the performance we're seeing.

One thing to note is that in last year, two things happened: obviously, rates took off; the variable rates took off from zero, which was a big boost we didn't see coming at the beginning of the year. The second is, we began generating custodial income from the CDB side of the business. So you won't see that same ramp this year. If you're looking at the year-on-year comparison, a better way to evaluate is, look at where things are now and add whatever cash you think you can add to the current pile while tracking our rate guidance.

Very well done, Jon. Thank you. Finally, now I can dive in one quick last one. Jon, you talked about new logo growth and expanded network partner footprint supporting the growth for HealthEquity. If I'm a prospective customer, what is the impetus to change or switch vendors this year? Is there something different driving customers to switch? Or is it just kind of more of the same?

I think there are two things happening. From one perspective, some HR departments are coming out of the pandemic and, particularly in a period where they've seen one year of inflation. A little more attention is being paid to benefit design and whether the right vendor mix is available to optimize what they are trying to do on the benefit side. I think we're a great partner in that environment. The second factor is understanding who is in this for the long haul. The number of firms genuinely committed to growth is perhaps smaller than it was. But people looking at our capabilities and seeing that we are investing in infrastructure, technology, features, and functionality, and recognizing that we are well-positioned to assist them in driving deep adoption of health savings accounts.

Jon nailed that. If you just look back at history, we did the Wage deal right before Covid hit. It took us a while to gain trust from brokers, consultants, and large employers that we could execute with the much bigger company going from 900 HealthEquity teammates to 3,500 after the acquisition. I think we've regained a lot of that trust back, which makes it much easier to make changes when you know that systems are going to work.

Thanks, Allen.

And our next question comes from George Hill of Deutsche Bank.

Tyson, I'll echo the positive sentiment on your service. Jon, two quick ones for me. First, as you talked about the enterprise pipeline being robust, I don't know if there's any way you can quantify that or throw some numbers around it? What's the strategy to gain share as we go through the upcoming selling season? I'll pause for now, and come back for the second one.

I'm out of the game of giving sales pipeline numbers, and I'm not going to get back into it – two in one day. But let me say the strategy for us is straightforward. We are the market leader across this bundle. We have good people and have delivered a remarkable open enrollment season. A lot of enterprise deals start at the end of the prior year, and prospective clients gauge customer service responsiveness as well as other operational efficiencies, and those matter. We are investing in infrastructure and technology, and our clients are seeing that; it puts us in a fortunate position compared to others.

Okay. That's helpful. And I think I knew you weren’t going to give me an answer to the pipeline question, so I have a follow-up, which I also think I'm not sure you’ll give me an answer to. But given that we’ve talked about the average – well, I know that the company historically does not prognosticate rates. However, people in my business are in the business of prognosticating rates. Given where we are in the rate cycle, do you think about proactively trying to extend duration?

The slide is relevant. Let me first say, we've not been prognosticators and have tried to generally maintain aggregate duration for liquidity at a 3- to 4-year range. One benefit of the enhanced rates product is that we're able to meet our liquidity needs while using somewhat longer-term instruments. The potential to see increased yields depends on a variety of timing factors associated with contracts and rollovers.

Yes. First of all, Tyson, it’s been a pleasure working with you. In terms of serious questions, just on the yield moving up on the cash, was that partially just due to the enhanced yield product becoming a bigger portion of the overall deal? Because obviously, Fed funds don’t fully explain it. I wanted to clarify that.

Yes. In addition, I would say, during this period, to the extent we had bank placements, they would have been small. We've talked before that the bank placement market is very favorable right now.

Great. If we take a look at investments, I mean, 23% growth in terms of investments there. Are you seeing behavior changes among holders? Are they starting to chase additional yield through intermediate bond products? How should we think about that?

Our portfolio offering does include things like ultrashort bond funds. Those funds have been quite popular. I do think there's an element of our members saying they want more yield than they can get on cash, so they’re willing to give up liquidity. That's a win for us because we're giving them the product they want, leading to sticky customers in the long run.

Congrats on a good quarter. Tyson, it was great working with you. Can you talk about either Jon or Tyson, the revenue delta on interchange 1Q versus 2Q; it's obviously down about 13%. Could you describe the COBRA impact?

Tyson, you want to hit Part A of that?

Yes. On the interchange, David, that's just the normal seasonality. People are spending as they've loaded up the HSA accounts in Q1 and will spend less in the summer months. So we always see that seasonality play out. You’ll see a high point in Q1, a softer point in Q2, and then as we move into Q4 with unused funds, you'll see a stronger Q4. So that seasonality can look a little funny in history. So it’s hard to decipher that due to the changing quarterly effects we’re tracking.

On the COBRA side, we highlighted in the script that the legislative impact has been difficult to predict since the introduction of the national emergency legislation. The federal government has given individuals various options regarding COBRA, which has altered our revenue generation from communications and signups.

Okay, great. And then I think what I’m hearing also is that the risk of a recession or slowdown next year isn't affecting demand. In fact, there’s lots of demand, you're signing up clients. Is that right?

I don't know that our clients in the human resources department are experts at predicting recessions. But I think it’s fair to say that people are anticipating tighter conditions, which translates to more attention on plan design and win-win scenarios that we mentioned earlier. However, our account metrics are moving in tandem with national data.

When you say you’ll see quite a few of these in a favorable manner, is that what you’re implying?

Yes.

Is there a point where you renegotiate contracts every three years, which would imply yields should increase through next year, right?

Yes. Our duration is three; however, bigger contracts, the deposit contracts themselves are around four or five years, so there’s cash running out of deposit contracts that contributes to this.

Your service gross margin has improved significantly, getting as high as 38% in Q2 of '22. How high can you trend service gross margin?

We've discussed this in the past. I'm not able to make long-term predictions, but I do think we have room for some growth from here. Over time, there’s potential to get this number back into the 30s by driving growth in profitable sectors such as CDBs, as well as HSA account growth. We also see efficiencies that will help us drive service cost down, establishing a solid path to margin expansion.

And our next question comes from Sandy Draper Guggenheim.

Thanks very much. Not a lot left to ask. So first, I'll just say I’ll echo Tyson. It's been a pleasure working with you, and hopefully we can cross paths in the future. If I just do the simple math of looking at the cash per account, it's down a touch. I know that's just a one-day comparison from last quarter to this quarter. Is there a notable change in behavior you're seeing now versus the past couple of years about the desire for people to pay themselves back versus putting money in and not reimbursing themselves?

I think it's worth noting that we've seen record growth in total assets for the quarter. We're talking about close to $1 billion in asset growth over a single quarter, which is really good. Contributions are up year-over-year, and transfers from cash to investments increased, reflecting a better market backdrop. The underlying contribution behavior was also in line with expectations.

On this very day, there’s nothing happening in D.C. However, we continue to have fantastic discussions about loosening some qualifying attributes around high-deductible health plans. There's a strong desire to expand the benefits of HSAs which will allow more Americans to benefit from these accounts. We're hopeful that bills will become available to create such benefits before the next presidential election.

Thanks, everybody. I really appreciate it. That’s it. We'll see you all in December and some of you before then, and of course, in February.

Thank you.

Thank you.

Thank you, everybody. This concludes today's conference call. Thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.