HealthEquity, Inc. reported significant financial results for the three and nine months ended October 31, 2024, showcasing a total revenue of $300.4 million for the quarter, a 21% increase from $249.2 million in the same period last year. For the nine-month period, revenue reached $888.0 million, up 20% from $737.2 million year-over-year. The company's service revenue grew by 4% to $119.2 million in the third quarter, while custodial revenue surged by 41% to $141.0 million, driven by increased average daily balances and higher interest rates. However, net income for the quarter fell to $5.7 million, a 61% decrease from $14.7 million in the prior year, primarily due to a $30 million expense related to a lease termination settlement.
In terms of operational metrics, HealthEquity administered 9.5 million health savings accounts (HSAs) as of October 31, 2024, reflecting a 15% increase from the previous year. The total accounts, which include complementary consumer-directed benefits (CDBs), reached 16.5 million, an 8% rise. The company also reported a significant increase in HSA assets, totaling $30.0 billion, a 33% increase from $22.6 billion a year earlier. This growth was attributed to net contributions from new and existing members, as well as the acquisition of the BenefitWallet HSA portfolio.
Strategically, HealthEquity completed the acquisition of the BenefitWallet HSA portfolio in a series of transactions that closed in 2024, which contributed to the increase in both customer accounts and HSA assets. The company capitalized $27.2 million in transaction costs associated with this acquisition. Additionally, HealthEquity entered into a new $1.0 billion revolving credit facility in August 2024, which was utilized to refinance existing debt and support future growth initiatives.
Despite the challenges reflected in the net income figures, HealthEquity's Adjusted EBITDA increased by 24% to $118.2 million for the third quarter, indicating improved operational efficiency. The company anticipates continued growth in service and custodial revenues, driven by an expanding customer base and favorable market conditions. However, it also acknowledges potential risks related to market fluctuations and regulatory changes that could impact its business model.
Looking ahead, HealthEquity remains focused on leveraging its technology and expanding its service offerings to enhance customer engagement and retention. The company plans to continue investing in its proprietary technology to improve service delivery and operational efficiency, while also exploring further acquisition opportunities to strengthen its market position in the health savings account sector.
About HEALTHEQUITY, INC.
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