Q3 2025 HealthEquity Inc Earnings Call
Third quarter 2025 earnings conference call.
Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Richard Putnam. Please go ahead.
Richard Putnam: Thank you Nick Hello, everyone welcome to health equities third quarter of fiscal year 2025 earnings Conference call. My name is Richard Putnam Investor Relations for health equity.
Joining me today is John Kessler, President and CEO, Dr. Steve Neeleman, Vice chair and founder of the company.
Richard Putnam: James Laconia Executive Vice President and CFO Scott Cutler.
Richard Putnam: <unk> appointed successor, President and CEO beginning in January.
Richard Putnam: Before I turn the call over to John I have a couple of reminders first a press release announcing the financial results for our third quarter of fiscal 2025 was issued after the market closed this afternoon. These.
Richard Putnam: These financial results include the contributions of our wholly owned subsidiaries and accounts they administer <unk>.
Richard Putnam: Press release includes definitions of certain non-GAAP financial measures.
Richard Putnam: We will.
Richard Putnam: Year to date, we can.
Richard Putnam: You can find on our Investor Relations website, a copy of today's press release, including reconciliations of these non-GAAP measures.
Richard Putnam: Comparable GAAP measures and a recording of this webcast that what it is.
<unk> Dot health equity Dot com.
Richard Putnam: Second.
Speaker Change: Our comments and responses to your questions today reflects management's view as of today December nine 2024.
Speaker Change: And will contain forward looking statements as defined by the SEC, including predictions expectations estimates or other information that might be considered forward looking.
Speaker Change: There are many important factors relating to our business, which could affect the forward looking statements made today.
Speaker Change: These forward looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from statements made here today, we caution against placing undue reliance on these forward looking statements.
Speaker Change: And we also encourage you to review the discussion of these factors and other risks that may affect our future results and market price of our stock as detailed in our latest annual report on Form 10-K.
Speaker Change: And in subsequent periodic reports filed with the SEC, we assume no obligation to revise or update. These forward looking statements in light of new information or future events.
Speaker Change: Now over to Mr. Jon Kessler. Thank.
Jon Kessler: Thank you Richard well done as always.
Speaker Change: The body and happy holidays.
Speaker Change: We'll briefly discuss Q3's momentum in key metrics and then got a cavalcade of Sars Steve.
Speaker Change: We will describe political election paths to help account expansion and want to hear about that Jim will detail Q3 financial results raised FY 'twenty five guidance and preview FY 'twenty 6 million only hear about that and then.
Speaker Change: We're privileged to have Scott Cutler here with us with a few words of introduction.
Speaker Change: Let's get to it.
Speaker Change: In Q3, the team again delivered double digit year over year growth across most key metrics, including revenue, which was plus 21% adjusted EBITDA, plus 24% and HSA assets plus 33%.
Speaker Change: HSA members grew 15% driving total accounts up 8%.
Speaker Change: Health equity ended Q3 with $16 5 million total accounts, including $9 5 million HSA.
Speaker Change: <unk> $30 billion in HSA assets, which is a lot.
Speaker Change: In fact, the HSA assets increased seven.
Speaker Change: <unk> year over year.
Speaker Change: And we grew the number of our HSA members, who invest by 21% year over year, helping to drive invested assets up 58% to $13 6 billion and if you subtract that from 30, no. The HSA cash reached $16 4 billion.
With sales and digital member education in action I wanted to say like firing on all cylinders, but with a lawyer problem with that so I didn't say that.
Speaker Change: I'm not even sure what the lawyer problem was in any case.
Deep Purple opened 186000, new HSA is organically in the quarter and that's 14% more than Q3 last year. Our HSA members added 0.5 billion in assets compared to 0.6 billion decline in Q3.
Speaker Change: Which is typically a lighter quarter organically.
Speaker Change: In fact.
Average HSA balance has grown by double digits over the past 12 months, which is awesome for our members in Austin for our mission.
Speaker Change: Net CBS were up.
Speaker Change: 0.1 million quarter over quarter, though flat year over year.
Speaker Change: As a reminder of the impact of CDB comps on CDB comps.
Speaker Change: Clearly reading the wrong thing of runoff of National Emergency accounts. This will be the last time I will have to say that not only because it is my last earnings call, but because we are lapping those comps.
Speaker Change: We faced a monster year over year, the HSA sales comp in Q4, it's a monster we had an incredible Q4 of last year.
Speaker Change: But.
Speaker Change: The team's performance over the first three quarters of fiscal 'twenty five gives it a really good chance to break the full year record for new HSA is which would be incredible.
Speaker Change: Our operations teams were also very busy in Q3, completing the final wave of single card processor consolidation, while battling a sophisticated and persistent broad actor.
Speaker Change: These broad activities led to extra of both of these kinds of activities I'm, sorry, led to excess onetime service expense, which Jim will detail a top seasonal spend for new partner and client implementations and hiring and training and testing for a successful open enrollment season, which is now very much underway.
Speaker Change: You should feel confident though that the underlying trend of service cost reduction through remarkable digital experience continues with AI transforming more member contacts and claims interactions and mobile wallet integrations of planting more plastic.
Speaker Change: Have a health equity card and it's not in your mobile wallet.
Speaker Change: And to do it.
Jim.
Not yet because you don't spend it yes no okay.
Speaker Change: Alright, we need to work on that Richard you done it.
Speaker Change: Steve.
These done absolutely I noticed with that let me emphasis.
Speaker Change: Okay, Alright, I've done it it's awesome you should do it.
Speaker Change: Speaking of busy.
Speaker Change: With election day behind Us, Steve and the advocacy team are now supporting multiple efforts to expand Americans access to personal portable health accounts, let's hear about it Steve Neeleman.
Speaker Change: Thank you John as always fantastic kickoff them.
Speaker Change: I missed it.
Speaker Change: Anyway, we now see three approaches to expanding access to personal portable health accounts.
These include bipartisan legislation Budd.
Budget reconciliation by their Republican majority in rule, making by the New administration.
The bipartisan hope back formerly known as HR $93 94 would enable all Americans with ACA qualified health insurance isn't HSA compatible including all Medicare recipients to save and invest tax free.
Speaker Change: For medical expenses and.
It encourages employers to contribute to the savings of low and middle class income employees.
Speaker Change: Introduced in August by three Democrats and three Republicans. The Hope Act now has the endorsement of the house problem Solvers caucus, which increased 32 Democrats and 27 Republicans.
Speaker Change: Hope has also been endorsed by diverse interests, including the American benefits Council.
Speaker Change: Members include 430 of the major nations largest employers.
Speaker Change: A few labor organizations and the U S chamber of Commerce, which is the country's largest business organization.
Speaker Change: Another path as budget reconciliation.
Speaker Change: This has been used by Democratic and Republican majorities in recent years.
Speaker Change: To pass.
Speaker Change: Wide ranging tax and spending bills because it is not subject to filibuster and the next Congress is likely to produce multiple reconciliation bills.
Speaker Change: Also the HSA modernization act and the bipartisan HSA improvement Act, which were both past.
Speaker Change: By the house ways and means committee and the current Congress are examples of HSA expansion. The majority can attached to a reconciliation bill.
Speaker Change: These two bills would expand HSA access to working seniors on Medicare.
Speaker Change: It would also include expansion of VA beneficiaries and Americans with Indian Health service coverage.
Speaker Change: But also provide for HSA funding from unspent FSA and HRA.
It would raise annual HSA contribution limits as well as making spending from HSA is more flexible and consumer friendly.
Speaker Change: And finally, the incoming administration can use its rule, making authority within an existing HSA law to expand access to the accounts for.
Speaker Change: For example by further expanding the wellness and preventative care that HSA compatible plans may cover outside of the required deductible.
Speaker Change: Or recognizing.
Speaker Change: The actual value of insurer contributions to HSA is offered with plans on the ACA exchanges.
Speaker Change: And also approving an HSA compatible plan designs and Medicare advantage. These are all ways that they can do that the administration may also expand HSA eligibility to wellness and fitness expenses.
Speaker Change: Finally Americans with access that.
Speaker Change: That have hsa's make health care more affordable.
Speaker Change: And exhibit more of the healthy behaviors it reduce health care costs. Moreover, personally owned.
Speaker Change: Portable and Investable health accounts were widely popular among young and old Liberal and conservative.
Speaker Change: So we are quite optimistic about legislative and regulatory action to expand access and we'll continue to support it through advocacy expert advice incredible research I'll now turn the time over to Jim for our results and guidance.
Jim: Jim takeaway.
Jim: Yep, Thanks, Steve Thanks, John.
Speaker Change: I will briefly highlight our fiscal third quarter, GAAP and non-GAAP financial results.
As always we provide a reconciliation of GAAP measures to non-GAAP measures in today's press release.
Speaker Change: As a reminder, the results presented here reflect the Reclassifications of our income statement. We described in our fiscal year 2024 10-K, both for fiscal 'twenty, four and 25 for comparison.
Speaker Change: Third quarter revenue increased 21% year over year.
Speaker Change: Service revenue was $119 2 million up 4% year over year, reflecting growth in total accounts HSA investor accounts in invested assets and lower average unit service revenue as product mix continues to shift towards lower headline fee hsa's.
Custodial revenue grew 41% to $141 million in the third quarter <unk>.
Speaker Change: The annualized yield on HSA cash was $3 one 7% for the quarter as a result of higher replacement rates and continued mix shift to enhance rates.
Speaker Change: Interchange revenue grew 15% to $40 3 million again, notably faster than account growth as members increased contributions and distributions and conducted more payments on health equities card and platform versus requesting cash reimbursement for payments made off platform.
Speaker Change: Gross profit.
Speaker Change: Plus a $197 million was 66% of revenue in the third quarter of this year up from 64% in third quarter last year as John mentioned in addition to seasonal factors gross profit during the quarter was reduced by approximately $8 million of excess service costs incurred to protect members from.
Speaker Change: And reimburse those impacted by sophisticated fraud activity and to assist members during the final and largest phase of our card processor consolidation.
While the seasonal ramp up continues as a result of the sales success as John discussed. We believe these event driven costs are largely behind us and expect only modest carryover into Q4.
Speaker Change: Net income for the third quarter was $5 7 million or <unk> <unk> per share on a GAAP EPS basis and included the $30 million one time settlement of a wage works lease termination lawsuits that we disclosed on form 8-K in November.
The studio revenue grew 41% to $141 million in the third quarter the annualized yield on each say cash was 3.17% for the quarter as a result of higher replacement rates and continued mix shifts to enhance rates.
Speaker Change: non-GAAP net income was $69 4 million or <unk> 78 per share versus <unk> 60 per share last year, which excludes that onetime costs.
Interchange revenue grew 15% to $40 3 million again, notably faster than account growth as members increased contribution and distributions and conducted more payments on health equities card and platform versus requesting cash reimbursement for payments made off platform.
Adjusted EBITDA for the quarter was $118 2 million up 24% compared to Q3 last year and adjusted EBITDA as a percentage of revenue was 39% up from 38% in the third quarter last year, but of course was impacted by the event driven service cost I referenced earlier.
Gross profit.
Well of $197 million was 66% of revenue in the third quarter of this year up from 64% in the third quarter last year as John mentioned in addition to seasonal factors gross profit during the quarter was reduced by approximately $8 million of excess service costs incurred to protect members from.
Speaker Change: Turning to the balance sheet as of quarter end October 31, 2020 for cash on hand was $322 million as we generated $264 million of cash flow from operations in the first nine months of fiscal year 'twenty five.
And reimburse those impacted by sophisticated fraud activity and to assist members during the final and the largest phase of our card processor consolidation.
Speaker Change: The company repaid $25 million of revolver borrowings during the quarter, leaving approximately $1 1 billion of debt outstanding net of issuance costs.
Speaker Change: Company also repurchased $60 million of its outstanding shares during the quarter under the previously announced 300 million authorization, leaving $240 million remaining.
While the seasonal ramp up continues as a result of the sales success as John discussed. We believe these event driven costs are largely behind us and expect only modest carryover into Q4.
Speaker Change: Today's fiscal 'twenty five guidance reflects the carryforward of a strong sales trajectory operational efficiencies, resulting from our technology investments and current forward interest rate curves, we expect revenue in a range between 1.15 and $1 195 billion.
Net income for the third quarter was $5 7 million or six cents per share on a GAAP EPS basis and included the $30 million. One time settlement of a wage works lease termination lawsuit that we disclosed on form 8-K in November.
non-GAAP net income was $69 4 million or <unk> 78 per share versus <unk> 60 per share last year, which excludes that one time cost.
Speaker Change: GAAP net income in a range of $88 million to $96 million.
Speaker Change: Or <unk> 99 to $1 eight per share and includes the $30 million settlement mentioned earlier.
Adjusted EBITDA for the quarter was $118 2 million up 24% compared to Q3 last year and adjusted EBITDA as a percentage of revenue was 39% up from 38% in the third quarter last year, but of course was impacted by the event driven service cost I referenced earlier.
Speaker Change: We expect non-GAAP net income to be between 274% and $281 million or $3 eight and $3 16 per share based upon an estimated 89 million shares outstanding for the year.
Speaker Change: Finally, we expect adjusted EBITDA to be between 470 and $480 million.
Turning to the balance sheet as of quarter end October 31, 2020 for cash on hand was $322 million as we generated $264 million of cash flow from operations in the first nine months of fiscal year 'twenty five.
Speaker Change: We now expect the average yield on HSA cash will be approximately three 1% for fiscal 'twenty five.
As a reminder, we based custodial yield assumptions embedded in guidance on projected HSA cash deployment and rollovers a schedule of which is contained in today's release as well as the analysis to forward looking market indicators such as the secured overnight financing rate in mid duration Treasury forward curves. These are of course subject to.
The company repaid $25 million of revolver borrowings during the quarter, leaving approximately $1 1 billion of debt outstanding net of issuance costs.
<unk> also purchased $60 million of its outstanding shares during the quarter under the previously announced 300 million authorization, leaving $240 million remaining.
Speaker Change: Change in not perfect predictors of future market conditions.
Today's fiscal 'twenty five guidance reflects the carry forward of a strong sales trajectory operational efficiencies, resulting from our technology investments and current forward interest rate curves, we expect revenue in a range between 1.185 and 1.1 95 billion.
Speaker Change: Seasonally our fourth quarter is usually our highest service cost quarter of the year as our busy onboarding season.
Speaker Change: Our guidance also includes additional expected share repurchases under the $300 million repurchase authorization, we expect both to return capital to shareholders and reduce revolver borrowings in the remaining quarter of the fiscal year.
Yeah.
GAAP net income in a range of $88 million to $96 million or <unk> 99 cents to $1 eight per share and includes the $30 million settlement mentioned earlier.
Speaker Change: With continued strong cash flows and available borrowings on our revolver, we will maintain ample capacity for portfolio acquisitions should they become available.
We expect non-GAAP net income to be between 274, and $281 million or $3 eight and $3.16 per share based upon an estimated 89 million shares outstanding for the year.
Speaker Change: We assume a non-GAAP income tax rate of approximately 25% and a diluted share count of $89 million <unk>.
Speaker Change: Including common share equivalents.
Speaker Change: Based on our current full year guidance, we now project a GAAP tax rate for fiscal 'twenty five at about 20%.
We expect adjusted EBITDA to be between 470 and $480 million.
Speaker Change: As we've done in previous reporting periods. Our full fiscal 2025 guidance includes a reconciliation of GAAP to the non-GAAP metrics provided in the earnings release and the definition of all such items is included at the end of the earnings release and.
We now expect the average yield on HSA cash will be approximately three 1% for fiscal 'twenty five.
As a reminder, we base custodial yield assumptions embedded in guidance on projected HSA cash deployment and rollovers scheduled which is contained in today's release as well as the analysis of forward booking market indicators, such as the secured overnight financing rate and mid duration Treasury forward curves. These are of course subject to.
Speaker Change: 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 included.
We're also providing the following initial guidance for fiscal year 2026.
Speaker Change: Expect revenue to be between $1 $2 75, and one point to $95 billion we.
And not perfect predictors of future market conditions.
Seasonally our fourth quarter is usually our highest service cost quarter of the year as our busy onboarding season.
Speaker Change: We expect margins will expand with adjusted EBITDA growing to approximately 41 five to <unk> 42, 5% of revenue in fiscal 'twenty six.
Our guidance also includes additional expected share repurchases under the $300 million repurchase authorization, we expect both to return capital to shareholders and reduce revolver borrowings in the remaining quarter of the fiscal year.
Speaker Change: This initial guidance is based on an average HSA cash yield range of three 4% to three 5%.
Speaker Change: Based on our outlook of interest rate conditions current forward interest rate curves for the year ahead, and the continued mix shift for basic rates from basic rates through enhanced rate.
With continued strong cash flows and available borrowings on our revolver, we will maintain ample capacity for portfolio acquisitions should they become available.
Speaker Change: A reconciliation of our adjusted EBITDA outlook for the fiscal year, ending January 31, 2026, and net income its most directly comparable GAAP measure is not included because our net income outlook for this future periods is not available without unreasonable effort of.
We assume a non-GAAP income tax rate of approximately 25% and a diluted share count of $89 million.
<unk> common share equivalents.
Based on our current full year guidance, we now project a GAAP tax rate for fiscal 'twenty five at about 20%.
Speaker Change: If we're unable to predict the ultimate outcome of certain significant items excluded from this non-GAAP measure such as stock based compensation expense and income tax provision or benefit.
As we've done in previous reporting periods. Our full fiscal 2025 guidance include a reconciliation of GAAP to the non-GAAP metrics provided in the earnings release and the definition of all such items is included at the end of the earnings release and.
Speaker Change: Like all of these introductions to other people who people wanting like this is the closest any of us are ever going to get the listening yasser's. So thanks Jim.
In addition, while the amortization of acquired intangible assets is being excluded from non-GAAP net income the revenue generated from those acquired intangible asset is included.
Speaker Change: It's now my pleasure genuinely so to introduce Scott Cutler, whom as you know who as you know.
Scott Cutler: Thank you destiny.
We're also providing the following initial guidance for fiscal year 2026, we expect revenue to be between one point to 75, and one point to 95 billion we.
Speaker Change: Who has seen no real <unk>.
Speaker Change: Excuse me as President and CEO on January six.
Speaker Change: Given that Scott is still at work managing a smooth transition at stock X we are.
We expect margins will expand with adjusted EBITDA growing to approximately 41 and a half to 42, 5% of revenue in fiscal 'twenty six.
Speaker Change: Our Super Grateful that he is in the office in the saddle joining todays call to introduce himself to you Scott.
This initial guidance is based on an average HSA cash yield range of three four to three 5%.
Scott Cutler: Thanks, John Thanks, everybody great to join team Purple Hum.
Based on our outlook of interest rate conditions current forward interest rate curves for the year ahead, and the continued mix shift for basic rate from basic rates through enhanced grades.
Speaker Change: Humbled honored and thrilled to be joining health equity at this time, certainly filling some big sneakers from John is in this transition pun intended John.
A reconciliation of our adjusted EBITDA outlook for the fiscal year, ending January 31, 2026, and net income its most directly comparable GAAP measure is not included because our net income outlook or this future periods is not available without unreasonable efforts that we're unable to predict the ultimate outcome of certain significant items excluded.
Speaker Change: I am excited about three things in joining team purple right now first I am inspired by the mission of the company, which was infused into every conversation throughout this process to save and improve lives by empowering health care consumers and.
I am excited to work alongside Steve fulfilling this mission.
Speaker Change: Second I am excited to be joining the leading company in this space and continuing to strive to deliver outperformance in the market.
This non-GAAP measure such as stock based compensation expense and income tax provision or benefit.
Third I'm excited to be joining the team in this next stage of growth at a time when the future holds so much opportunity for tech innovation.
Like all of these introductions to other people who people want it like this is the closest any of us are ever going to get to listen the Yonkers. So thanks Jim.
My career journey has been defined by digital and technology transformation across various industries and health equity will be the next chapter in industry in that journey.
It's now my pleasure genuinely so to introduce Scott Cutler, whom as you know who as you know we.
We did this to me.
Speaker Change: Looking forward to continuing to drive our tech enabled <unk> strategy.
Who has you know will succeed me as president and CEO on January six.
Speaker Change: The first Steve delivering remarkable experiences.
Speaker Change: Given that Scott is still at work managing a smooth transition at stock X. We are super Grateful that he is in the office in the saddle.
Speaker Change: This is using data science and technology to digitize, our remarkable purple service and education, while securing members assets and information.
Speaker Change: Joining today's call to introduce himself CEO Scott.
Speaker Change: Second is deepening partnerships using more advanced technologies to connect and extend the competitive advantage of our intelligent integrated ecosystem with our network partners and third driving member outcomes by combining proprietary technology data science and integrated partnerships to empower members to make better.
Scott Cutler: Thanks, John Thanks, everybody great to join team purple.
Scott Cutler: Humbled honored and thrilled to be joining health equity at this time, certainly filling some big sneakers from Germany in this transition pun intended John.
Scott Cutler: I'm excited about three things in joining team purple right now first I'm inspired by the mission of the company, which was infused into every conversation throughout this process to save and improve lives by empowering health care consumers.
Health and financial decisions I really want to thank John Steve and team Purple for welcoming me and their support in this transition process I'm excited to be working with the team to deliver on our commitments to partners clients and members to our investors to each of you I look forward to meeting many of you in upcoming conferences and reporting to you our.
Scott Cutler: I am excited to work alongside Steve fulfilling this mission.
Scott Cutler: I am excited to be joining the leading company in this space and continuing to strive to deliver outperformance in the market.
Speaker Change: Progress towards our outlined objectives.
Speaker Change: Okay.
Scott Cutler: Third I'm excited to be joining the team in this next stage of growth at a time when the future holds so much opportunity for tech innovation.
Speaker Change: Thanks, Scott and a nice start on the puns held on the company May continue.
Speaker Change: Let's go to Q&A.
Scott Cutler: My career journey has been defined by digital and technology transformation across various industries and health equity will be the next chapter in industry in that journey.
Speaker Change: Operator.
Thank you.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Scott Cutler: Looking forward to continuing to drive our tech enabled three D strategy.
The first deep delivering remarkable experiences.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Scott Cutler: This is using data science and technology to digitize, our remarkable purple service and education, while securing members assets and information.
Speaker Change: In the interest of time, we ask that you. Please limit yourself to one question for additional questions. Please rejoin the question queue.
Speaker Change: And our first question today will come from Gregory Peters with Raymond James. Please go ahead.
Scott Cutler: Second is deepening partnerships using more advanced technologies to connect and extend the competitive advantage of our intelligent integrated ecosystem with our network partners and third driving member outcomes by combining proprietary technology data science and integrated partnerships to empower members to make better.
Speaker Change: Yeah.
Speaker Change: Well good afternoon, everyone.
Speaker Change: Good afternoon habit, let us habit man Taman yes.
Speaker Change: You have it well.
Speaker Change: I have one question in southern parts.
Speaker Change: Yes.
Speaker Change: Health and financial decisions I really want to thank John Steve and team Purple for welcoming me and their support in this transition process I'm excited to be working with the team to deliver on our commitments to partners clients and members to our investors to each of you I look forward to meeting many of you in upcoming conferences and reporting to you our.
Speaker Change: John that will give you an opportunity to give me along with I'm sure a number of the other sell side analysts to hard times for the remainder of the hour.
Speaker Change: Welcome aboard Scott My one question in several parts as well.
Speaker Change: So the big picture is the revenue guidance on fiscal year 'twenty six.
Speaker Change: Progress towards our outlined objectives.
Scott Cutler: If I'm not mistaken, it's probably a little bit below consensus.
Speaker Change: Okay.
Speaker Change: Thanks, Scott and a nice start on the tons held on the comedy May continue.
Scott Cutler: Reflects high single digit year over year growth so <unk>.
Speaker Change: Let's go to Q&A.
Speaker Change: Maybe you could.
Speaker Change: Give us some color on the several parts that are comprising the fiscal year 2006 guidance.
Speaker Change: Operator.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you were using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: Well I'll take this one first sure.
Speaker Change: Well, yes, I think.
Speaker Change: On the main part like the key part of the guide is our is our expectation on the custodial yield three 4% to three five.
Speaker Change: At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
In the interest of time, we ask that you. Please limit yourself to one question for additional questions. Please rejoin the question queue.
Speaker Change: I think it's illogical Bill do you have the refresh of our R.
Speaker Change: And our first question today will come from Gregory Peter's worth of Raymond James. Please go ahead.
Speaker Change: Our HSA cash maturity schedule, you see what's maturing youll see where the five year is today in a reasonable a.
Speaker Change: Well good afternoon, everyone.
Speaker Change: A reasonable premium to that placed in a combo of enhanced enhanced and basic rate.
Speaker Change: Good afternoon habit, let us habit man come on let you have it well.
Speaker Change: So the pic the pick up on those maturing.
Speaker Change: I have one question in southern parts.
Assets is not as big.
Speaker Change: Yeah.
Speaker Change: So call it sort of roughly $4 billion.
Speaker Change: John that will give you an opportunity to give me along with I'm sure a number of the other sell side analysts have hard time for the remainder of the hour.
Speaker Change: <unk> replaced in the next year for round numbers that at today's rates.
You are rolling off.
Speaker Change: Welcome aboard Scott My one question in several parts is.
Speaker Change: Roughly roughly 332% average rate. So I think you can do that you can do that math.
Speaker Change: But the big picture is the revenue guidance on fiscal year 'twenty six.
Speaker Change: And comfortably get in get inside our range there.
Speaker Change:
Speaker Change: And I think.
Speaker Change: If if I'm not mistaken, it's probably a little bit below consensus and reflects high single digit year over year growth.
Speaker Change: The other main line like we are we are significantly outperforming in the interchange line big step up in spend spend per account right remember that we consider that a service revenue you would expect it to normally grow.
Speaker Change: So.
Speaker Change: Maybe you could.
Speaker Change: Give us some color on the several parts that are comprising the fiscal year 26 guidance.
Speaker Change: Grow with account growth X X Cobra, which doesn't have which doesn't have a card.
But this year, where we're really outperforming that.
Speaker Change: Well I'll take this one first sure.
Well, Yeah, I think I think on the main part like the key part of the guide is our is our expectation on the custodial yield.
Speaker Change: So I think it's sort of prudent for us to be cautious about about future contributions and sand in that line.
Speaker Change: Seeing contributions up we're seeing spend up we're seeing average ticket up we're seeing usage of the card versus reimbursements up.
Speaker Change: 334 to three five.
Speaker Change: I think it's illogical Bill do you have the refresh of our our HSA cash maturity schedule you see what's maturing you see where the five year is today in a reasonable.
Speaker Change: And and I think it's reasonable to two expect that to dial back down in the in the forward in the forward year.
Speaker Change: A reasonable premium to that place then in a combo of enhanced enhanced and basic rate.
And then don't forget we've had we've had tremendous tremendous.
Speaker Change: So the pic the pick up on on those maturing.
Speaker Change: Market action. This year that you can't just annualize enrolled forward into the next year.
Assets is not as big so call it sort of roughly $4 billion.
Speaker Change: So, bringing all of those drivers back into into expected normalized growth I think I think they'll come out too.
Speaker Change: Being replaced in the next year for round numbers that at todays rates and Youre Rolling off you know roughly roughly three 3.2% average rate. So I think he can do that you can do that math.
Speaker Change: To something close to what we just guided you to.
Speaker Change: I would just add.
Speaker Change: Conceptually.
And comfortably get in get inside our range there.
We always talk about.
Speaker Change: Outgrowing the market.
Speaker Change: And I think on the other mainline like we are we are significantly outperforming in the interchange line big step up in spend spend per account right remember that we consider that a service revenue you would expect it to normally grow.
Speaker Change: And then outgrowing, our topline and Bottomline.
Speaker Change: And I think here.
Speaker Change: Uh huh.
Speaker Change: What we've tried to do as we always do with this first guide you've only been doing the first guide for what three years earlier.
Speaker Change: Grow with account growth X X Cobra, which doesn't have that which doesn't have a card.
Speaker Change: We started it during COVID-19.
Speaker Change: But this year, where we're really outperforming that.
We always have this challenge that is what we tried to do is we guide at this point to what we see.
Speaker Change: So I think it's it's sort of prudent for us to be cautious about about future contributions and sand in that line.
Speaker Change: And so what Jim is and I think that's particularly true this year because I'm.
Speaker Change: Were seeing contributions up we're seeing spend up we're seeing average ticket up we're seeing usage of the card versus reimbursements up and and I think it's a sort of reasonable to two expect that to dial back down in the in the forward in the forward year and then don't forget we've had we've had tremendous.
Speaker Change: I'm not going to write checks that I can't cash that I'm not going to around to deal with that and I missed messed up of medicine, but you know what I'm, saying.
Speaker Change: And so when you really look at it.
Speaker Change: The yield is yield.
Speaker Change: We've given you the data that you can compute it and.
Speaker Change: Based on Q3, and if you're if you do the math youre going to get you can understand our range pretty well.
Speaker Change: Tremendous.
Speaker Change: Market action. This year that you can't just annualize and roll forward into the next year.
Speaker Change: And if someone wants to ask about that we can work through it that really leaves I think two variables that Jim highlighted that we're going to learn more about it and I'll, maybe add a third but but the first is.
Speaker Change: So bringing all of those are drivers back into into expected normalized growth I think I think it will come out to a two.
Speaker Change: Two to something close to what we are we just guided you to.
Speaker Change: I mean, I I would just add.
Speaker Change: Actual average cash related.
Speaker Change: Just conceptually.
Speaker Change: Over the course of this last year.
Speaker Change: Conceptually.
Speaker Change: You always talk about.
Speaker Change: Wobbled a bit in terms of.
Speaker Change: Outgrowing the market.
Speaker Change: Item it is difficult to forecast which is.
Speaker Change: And then outgrowing, our topline and Bottomline.
Speaker Change: The amount of cash that goes into investments versus not right now we have a ribbon market and the.
Speaker Change: And I think here.
Speaker Change: The result of that in my mind has been some excess flow relative to our expectations.
But.
Speaker Change: What we've tried to do is they always do with this first guide we've only been doing the first guide for what three years earlier.
Speaker Change: And that was certainly true earlier in the year I think maybe a little less so late in the last quarter.
But.
Speaker Change: We started it during COVID-19 and.
Speaker Change: Nonetheless.
Speaker Change: No thats something thats very hard for us to forecast and so what we'd rather do is.
Speaker Change: We always have this challenge that is what we tried to do is we guide at this point to what we see.
Speaker Change: <unk>.
Speaker Change: Give it a little time before we give our first true guidance.
Speaker Change: And so what Jim is and I think that's particularly true. This year, because you know I don't I'm not going to write checks that I can't cash, although I'm not gonna be around to deal with that and I missed messed up a matter of fact, you know what I'm, saying.
Speaker Change: And the second thing that Jim mentioned is interchange and we had a tremendous year on interchange at least up through three quarters. This year.
Speaker Change: And.
Speaker Change: It's a function of a lot of little things, but.
Speaker Change: And so when you really look at it.
As many good things are on the team has really worked on this.
Speaker Change: Yield is yield we've given you the data that you can compute it and.
Speaker Change: But.
Speaker Change: Ultimately we can't.
Speaker Change:
Speaker Change: Based on Q3, and if you're if you do the math youre going to get you can understand our range pretty well.
Speaker Change: What we'd rather see is less and we can as let's let's see how January goes as part of the fourth quarter and whatnot and that will give the team an opportunity to refine I think.
Speaker Change: And if someone wants to ask about that we can work through it that really leaves I think two variables that Jim highlighted that we're going to learn more about it and I'll, maybe at a third but but the first is.
Speaker Change: If I throw in on top of those two things just.
Speaker Change: Total account growth.
Speaker Change: Were you all can make your assessments.
You should be able to get to.
Speaker Change: Actual average cash needs over the course of this last year.
Speaker Change: A place that you feel is totally reasonable for fiscal 2016.
Greg: Thanks, Greg was that one part of the multi parts or was that the most part I think it was about that was the multipart.
Speaker Change: Wobbled a bit in terms of.
Speaker Change: And item is difficult to forecast, which is the.
Speaker Change: The amount of cash that goes into investments versus not right now we have a rip in market and.
Speaker Change: Thanks for the answer good luck John.
Speaker Change: Thank you.
The result of that in my mind has been some excess flow relative to our expectations.
Speaker Change: Our next question today will come from Stan Bernstein with Wells Fargo. Please go ahead.
Speaker Change: And that was certainly true earlier in the year I think maybe a little less so late in the last quarter, but.
Speaker Change: Alright, Thanks for taking my questions John of course wishing you best in retirement.
Speaker Change: I want to say your insights and jovial flare you brought to the earnings calls will be missed.
Speaker Change: Nonetheless.
Speaker Change: You know that's something that's very hard for us to forecast and so what we'd rather do is is let's give it a little time before we gave our first true guidance and the second thing that Jim mentioned is interchange and we had a tremendous year on interchange at least up through three quarters. This year.
Speaker Change: I do have two follow up questions actually on what Jim just discussed.
Speaker Change: Well first as it relates to the custodial revenue.
Speaker Change: As you think about next year I believe there is some wage work assets there and I'm. Just curious is the pacing of the reset for fiscal year 'twenty six assets in any way different than what we've seen this past year and then the follow up is I will just throw in and right now the follow up is.
And.
Speaker Change: It's a function of a lot of little things.
Speaker Change: You know as many good things are on the team has really worked on this.
Speaker Change: But.
Speaker Change: Ultimately we can't.
If we think about interchange revenue just touched on that.
Speaker Change: What we'd rather see as let's mccann's, let's let's see how January goes as part of the fourth quarter and whatnot and that will give the team an opportunity to refine I think.
It wasn't surprising to see I guess, a sequential decrease in revenue, 10% quarter on quarter, but gross margin went up I think over 400 basis points.
Speaker Change: If I throw in on top of those two things just.
Speaker Change: Can you just talk about what what drove the significant increase in the gross margin line. Thanks.
Speaker Change: Total account growth.
Speaker Change: Where you all can make your assessments.
Speaker Change: Okay, Yeah, let me take let me take the first the first part first and yes, well obviously there are some wage works.
Speaker Change: I think you should be able to get to.
Speaker Change: A place that you feel is totally reasonable for fiscal 2016.
Thanks, Craig was that one part of the multi parts or was that the most part I think it was that was the multipart.
Assets that were placed more more in the middle of.
Speaker Change: Or will be will be replaced more in the middle of 'twenty six than like a typical year. Obviously 25, we had a big slug of wage <unk>.
Speaker Change: Thanks for the answer good luck drop.
Thank you.
Speaker Change: Next question today will come from Stan Bernstein with Wells Fargo. Please go ahead.
Speaker Change: Benefit while the cash that came in so this is not quite a normal year of placements either.
Speaker Change: But I will like what one thing that we are definitely taking advantage of us seeing those big.
Speaker Change: Alright, Thanks for taking my questions John of course wishing you best in retirement.
Speaker Change: Just want to say your insights and jovial flare you brought to the earnings calls will be missed.
Speaker Change: $5 billion slugs of maturities in the next couple of years.
Speaker Change: I do have two follow up questions actually on what Jim just discussed.
We will take the opportunity and have taken the opportunity to pull pull forward some of those re pricings.
Speaker Change: Well first as it relates to the custodial revenue.
Speaker Change: And so when when the market gives us that opportunity like we sort of treat that as a as a hedge without without having to purchase a hedge from all of your the banking side of all of your houses.
Speaker Change: So if you think about next year I believe there was some wage work assets, there and I'm just curious as to the pacing of the reset for fiscal year 'twenty six assets in any way different than what we've seen this past year.
Speaker Change: So we have taken advantage of that and we will continue to take advantage of that if the market. If the market gives us that opportunity. So.
Speaker Change: And the follow up is I'll just throw in and right now the follow up is.
Speaker Change: If we think about interchange revenue just touched on that.
Speaker Change: So expect to see some of those maturities cold pulled forward and therefore reinvested earlier than than the maturity date. So I think that drives that de risks as we've talked about many times like this is $7 billion maturing over the next two fiscal years.
Speaker Change: It wasn't surprising to see I guess, a sequential decrease in revenue, 10% quarter on quarter, but gross margin went up I think over 400 basis points.
Speaker Change: Could you just talk about what what drove the significant increase in the gross margin line. Thanks.
Okay, Yeah, let me take let me take the first the first part first and yes, well. Obviously there are some wage works are assets that were placed a more more in the middle of or will be will be replaced more in the middle of 'twenty six than like a typical year, obviously 25, we had a big slug.
Speaker Change: In very large slugs like that that is one of our largest market risks, it's not that it's hard to move the corpus that's invested the yield on that is pretty well known right, but those but the five year treasury on any point in time 24 months out I don't have a clue, what that's going to be.
Speaker Change: Of wage of a benefit while our cash that came in so this is not quite a normal year of placements either.
Speaker Change: And if I can be have a clue.
Speaker Change: Like the first including the Scooby Doo, Alaska. It was definitely not the last of all I know is whatever I forecast that rate to be or the forward curve forecast that rates would be it's going to be wrong. So to the extent, we can pull pull forward some of that we will do that.
Speaker Change: Like what one thing that we are definitely taking advantage of it seeing those big $3 5 billion slugs of maturities in the next couple of years.
Speaker Change: But and we're going to keep keep pushing that transition to enhance rates forward over time.
Speaker Change: We will take the opportunity and have taken the opportunity to pull pull forward some of those re pricings.
Speaker Change: But yeah, I'd like to get to that finish line.
Speaker Change: And so when when the market gives us that opportunity like we sort of treat that as a as a hedge without without having to purchase the hedge from all of your the banking side of all of your houses.
As fast as possible.
Speaker Change: And then sorry, you want me to take the second part, yes sure the growth of the gross margin yes.
Speaker Change: So.
Speaker Change: Fundamentally I mean, the thing that is driving higher gross margin.
Speaker Change: So we have taken advantage of that and we will continue to take advantage of that if the market. If the market gives us that opportunity. So so.
Speaker Change: In the aggregate is the mix shift to HSA and fundamental.
Speaker Change: And.
Speaker Change: So expect to see some of those maturities cold pulled forward and therefore reinvested earlier than than the maturity date. So I think that's right that the risks as we've talked about many times like this is $7 billion maturing over the next two fiscal years.
Speaker Change: And.
Speaker Change: We've been saying that for quite a while.
Speaker Change: And it's been true for quite a while.
Speaker Change: I think if.
Speaker Change: If I focus in on this quarter.
Speaker Change: As both of US commented on in the in the tax there.
Speaker Change: There are some things that debt.
Speaker Change: In very large slugs like that that is one of our largest market risks, it's not that the it's hard to move the corpus that's invested the yield on that is pretty well known right, but those but the five year treasury on any point in time 24 months out I don't have a clue, what that's going to be and if I can give you a clue.
Speaker Change: Caught us a little bit, but that's also why we guide the way. We guide is because as we said many times theres kind of only one tail there so.
Speaker Change: But fundamentally.
Speaker Change: What's happening is that.
Speaker Change: Two things are happening simultaneously you have got the HSA is outgrowing the rest of the business Tom.
Speaker Change: Comma and HSA.
Speaker Change: Well, it's like the first blue in the Scooby Doo, Yeah, Alaska. It was definitely not the Alaska. All I know is whatever I forecast that rate to be or the forward curve forecast that rate to be it's going to be wrong. So.
<unk> are becoming more valuable.
Speaker Change: And that's a function of enhanced rates.
A function of coming out of the Covid period et cetera, and.
Speaker Change: So to the extent, we can pull pull forward some of that we will do that.
Speaker Change: So and that that process still has a ways to go. So we said early on that we thought that we would bring EBITDA margins into the <unk>.
Speaker Change: And we're going to keep keep pushing that transition to enhance rates forward over time.
Speaker Change: But yeah like I I'd like to get to that finish line.
Speaker Change: Our fiscal 'twenty six guide implies exactly that.
Speaker Change: Fast as possible.
Speaker Change: And sorry.
Speaker Change: Thanks, Dan.
Speaker Change: Let me take the second part, yes, sure the growth of the gross margin yeah.
Speaker Change: And your next question will come from Glen Santangelo with Jefferies. Please go ahead.
Speaker Change: So.
Speaker Change: Fundamentally I mean, the thing that is driving higher gross margin.
Glen Santangelo: Thanks for taking my question and John Good luck in retirement.
Speaker Change: In the aggregate is the mix shift to HSA fundamentally.
Glen Santangelo: I did want to ask you and Steve about this hold back I mean, essentially could you give us a sense for maybe how big the Tam is for HSA accounts today, and then Steve based on your understanding of the whole bag.
Speaker Change: And.
And you know.
Speaker Change: We've been saying that for quite a while and it's been true for quite a while.
Speaker Change: If I focus in on this quarter.
Glen Santangelo: How much you think that Tam expands and then John I don't know if you've had any conversations with with anyone on the Hill I don't know how you sort of handicap the likelihood of this moving forward or how you expect this to sort of play out in the new administration in 2025.
As both of US commented on and in the text there.
Speaker Change: There are some things that that.
Speaker Change: Caught us a little bit, but that's also why we guide the way. We guide is because as we've said many times there is kind of only one tail there so.
Speaker Change: But fundamentally what's happening is that.
Speaker Change: Hey, why don't you get started on this one.
Sure. Thanks Glenn.
Speaker Change: Two things are happening simultaneously you have got the HSA is outgrowing the rest of the business comma and HSA are becoming more valuable period.
Speaker Change: Yes, so I mean look as we've watched this for the last 20 years, we have a pretty good handle on.
Speaker Change: Were the Tam of HSA is headed and we've always said that we think at market maturity, Glenn and it'll be around 60 to 65 million accounts is kind of in that same range of where you see employer sponsored retirement accounts a lot land.
Speaker Change: And that's a function of enhanced rates, it's a function of.
Coming out of the Covid period et cetera, and so.
Speaker Change: So and that that process still has a ways to go. So we said early on that we thought that we would bring in EBITDA margins into the forties and physical.
Speaker Change: But there's over 100 million households, the United States 120 million households, and so.
Speaker Change: So we've really tried to dig in and say who could benefit from personal care.
Speaker Change: Fiscal 'twenty six five implies exactly that.
Speaker Change: Portable accounts that cant either because they're in a government plan.
Thanks, Dan.
Speaker Change: And your next question will come from Glen Santangelo with Jefferies. Please go ahead.
Speaker Change: Good Buddy of mine that used to fly Black Hawk helicopters and after 20 years in the military came out and took us first.
Oh, yeah. Thanks for taking my question and John Good luck in retirement.
Private sector job at age 45 in the afternoon at HSN. He couldnt have it's ridiculous.
I did want to ask you and Steve about this hope back I mean, essentially could you give us a sense for maybe how big the Tam is for HSA accounts today, and then Steve based on your understanding of the whole bag.
Speaker Change: And so because he was disqualified because he has access to military coverage, so well Im sure sure as we think that this will increase the Tam from where we think.
Speaker Change: How much you think that Tam expands and then John I don't know if you've had any conversations with with anyone on the Hill I don't know how you sort of handicap the likelihood of this moving forward or how you expect this to sort of play out in the new administration in 2025.
Speaker Change: Even if HSA is keep growing because there are some differences we can talk about HSA is and what the legislators who proposed with the Hope Act.
Speaker Change: Some slight differences.
Speaker Change: Not the least of which is is that any ACA critical coverage can can have a hope account, whereas with an HSA you have to be in this high deductible plan, but we think it could increase the tam by as much as 40% to 45 million households in these in which would be really exciting for people that are on Medicare and.
Speaker Change: Yeah, why don't you get started on this one.
Speaker Change: Sure. Thanks Glenn.
Speaker Change: So I mean look as we've watched this for the last 20 years, we have a pretty good handle on where the Tam of HSA is headed and we've always said that we think at market maturity, Glenn and it'll be around 60 to 65 million accounts is kind of in that same range of where you see employer sponsored retirement accounts a lot land.
Speaker Change: Medicaid Tricare health services et cetera, and then there's just a bunch of union plans and things like that to do not offer a high deductible plan exchanges.
Speaker Change: Theres a lot of people that go into exchanges and think Oh, I'm going to jump into an HSA to but because of the way the plan set up on an exchange they can't have an HSA.
Speaker Change: But you know there's over 100 million households in the United States 120 million households, and so.
Speaker Change: So we've really tried to dig in and say who could benefit from personal.
Speaker Change: So that's kind of the big picture, we think it takes the Tam.
Speaker Change: Portable accounts that cant either because they're in a government plan.
Speaker Change: Total addressable market of these personally owned portable investable accounts from 60 to 65 million accounts over 100 million.
Speaker Change: Good Buddy of mine that used to fly Black Hawk helicopters and after 20 years in the military came out and went and took his first.
Speaker Change: John did you want to add something else, we can talk a little bit about kind of the.
Speaker Change: Sausage, making out there that's going on that we're seeing but did you want to ask well why don't you compound that go ahead.
Speaker Change: Private sector job at age 45 in the afternoon that HSA and he couldn't habit it's ridiculous.
Speaker Change: Yes. So I mean look we were we were thrilled in the middle of the August recess.
Speaker Change: And so because he was disqualified because he has access to military coverages. So long story short is we think that this will increase the Tam from where we think you know even if HSA is keep growing because there are some differences. We can talk about HSA is and what the legislators who proposed with the hope.
Speaker Change: Six legislators came together and they introduced the bill in the they've been working on it for a couple of years they were.
Speaker Change: Certainly talking to the industry and saying what can we do to get more people.
Speaker Change: Covered because out of pocket expenses are real the app.
Glenn Santangelo: Average deductible for a family Glenn in a PPO plan that is not HSA qualified is about three grand it's real money to American family. When the median household income in this country is about 70000.
Speaker Change: Back theirs.
Speaker Change: There are some slight differences.
Not the least of which is is that any AC acritical coverage can can have a hope account, whereas with an HSA you have to be in this high deductible plan, but we think it could increase the tam by as much as 40% to 45 million households.
Glenn Santangelo: Lot of money $3000.
Glenn Santangelo: The the median I'm sorry, the average deductible for someone in a high deductible plan an HSA qualified plan is about five grand.
Speaker Change: And which would be really exciting for people that are on Medicare and.
Speaker Change: Medicaid Tricare health services et cetera, and then there's just a bunch of union plans and things like that do not offer a high deductible plan exchanges.
Glenn Santangelo: So it is higher but still 3000 5000, a lot of money for people and so legislators know that no out of pocket expenses are very very costly and so they've been looking for different ways to do this and so they came together.
Speaker Change: There's a lot of people that go into exchanges and think Oh, I'm going to jump into an HSA to but because of the way. The plan set up on an exchange. They can't have an HSA. So that's kind of the big picture, we think it takes the Tam from.
Glenn Santangelo: Talk to their colleagues.
Glenn Santangelo: Colleagues in Congress, they talk to people on the other side of the aisle and so on the house introduced these house members introduced about the Bill back in August we were pretty pleased and that's been kind of need to see more and more have added I think theres over 'twenty and over 20 bipartisan legislators, it's right down the middle of Republicans and Democrats that are supporting this thing and then they did it.
Speaker Change: The total addressable market of these personally owned portable and vessel accounts from 60 to 65 million accounts to over 100 million.
John did you want to add something else, we can talk a little bit about you know kind of the.
Speaker Change: Sausage, making out there that's going on that we're seeing but did you want to ask well why don't you compound that go ahead.
Glenn Santangelo: Boat in the problem service caucus about 60 legislators there the way it in and again very bipartisan group, they're right in the middle which when you look at that the account numbers in Congress, who were basically even with a few folks that are waiting to see if they can get appointed.
Speaker Change: Yeah. So I mean look we were we were thrilled in the middle of the August recess.
Speaker Change: Six legislators came together and they introduced the bill and they had been working on it for a couple of years. They were certainly talking to the industry and saying what can we do to get more people covered because out of pocket expenses are real the average deductible for a family Glenn in a P. P O plan that.
Glenn Santangelo: Have you given up their seats I mean, it's kind of a 50 50 split that means when you get a block of 60 legislators in the middle of that actually I wanted to get some stuff done.
Glenn Santangelo: Pretty encouraging and then we're starting to see a lot of other groups come in as I mentioned in my prepared remarks, like American Med Affairs Council and some labor groups and things like that that are coming and saying Hey, we think this is a great idea. So with that type of momentum. Then the question is is how do you. How do you get this done and theres going to be stuff will start moving.
Speaker Change: There's not HSA qualified is about three grand it's real money to an American family. When the median household income in this country is about 70000, you know it's a lot of money $3000. The the median I'm sorry, the average deductible for someone in a high deductible plan an HSA qualified plan is about five grand So it is higher.
Glenn Santangelo: Obviously, you see the new Congress in January and then it's then it's where can you find a bill that can help tens of millions of Americans that hopefully will not break to break the budget and that's that's where we think the hope axis.
Speaker Change: But still 3000 5000, a lot of money for people and so legislators know that no out of pocket expenses are very very costly and so they've been looking for different ways to do this and so they came together they talk to their their colleagues in Congress. They talk to people on the other side of the aisle and so in the house introduced these house.
Glenn Santangelo: Fit that bill they still need to go through a scoring process and finalize that but the score should be lower than what we've seen in some of the.
Speaker Change: Its members introduced about the bill.
Glenn Santangelo: Other HSA expansion stuff, just because of the nature of the hope account.
Speaker Change: Back in August we were pretty pleased and then it's been kind of need to see more and more have added I think there's over 20 now over 20 bipartisan legislators, it's right down the middle of Republicans and Democrats that are supporting this thing and then they did a vote and the problems service caucus about 60 legislators there that weighed in and again very bipartisan group there.
Glenn Santangelo: But I think that hopefully gives you a little bit of an overview and have to take.
Speaker Change: Take another question or John I, certainly defer to you since you've been in the middle of that sausage factory.
Speaker Change: As a young.
Speaker Change: Graduate John was making excellent Richard doesn't want me to talk any more about this but im going to.
Speaker Change: Right in the middle which when you look at that the count numbers.
Speaker Change: Hello.
Speaker Change: Congress, we were basically even with.
Speaker Change: I am but I wont.
Speaker Change: Few folks that are waiting to see if they can get appointed.
Speaker Change: I'm going to say something different okay, but you are right. This is totally sell them through the book.
Have you given up their seats I mean, it's kind of a 50 50 split that means when you get a block of 60 legislators in the middle of that actually I wanted to get some stuff done well you know it is.
Speaker Change: Well put.
Speaker Change: Yeah.
Speaker Change: Something that the inverse of what Steve just said is.
Pretty encouraging and then we're starting to see a lot of other groups come in as I mentioned in my prepared remarks, like American benefits Council and some labor groups and things like that that are coming and saying Hey, we think this is a great idea. So with that type of momentum then the question is well how do you how do you get this done and theres going to be stuff will start moving oh.
Speaker Change: What happens when somebody.
Speaker Change: Out of pocket expenses, which every commercial planning United States has right, which Medicare has et cetera et cetera right.
Speaker Change: And they don't have access to one of these kinds of accounts. The answer is for every dollar that you are paying out of pocket you almost have to earn too right.
Speaker Change: Obviously, you see the new Congress in January and then it's then it's where can you find a bill that can help tens of millions of Americans that hopefully will not break the break the budget and that's that's where we think the hope axis can fit that bill they still need to go through a scoring process and finalize that.
Speaker Change: When you get through with the tax at the federal taxes, the state taxes payroll taxes, social security taxes, right Sam take a bite.
Speaker Change: <unk>.
Speaker Change: That's one of the reasons.
Bye.
Speaker Change: The pain of.
Speaker Change: But the the score should be lower than what we've seen in some of the.
Speaker Change: Out of pockets without access to these accounts, but without using the well is so seems so disproportionate.
Other HSA expansion stuff, just because of the nature of the home count.
Speaker Change: You actually have to earn so much more.
Speaker Change: But I think that hopefully gives you a little bit of an overview and happy to take.
To do it it's just crazy that we would not be giving people. This access and it's trying to do it.
Speaker Change: Take another question or John I, certainly defer to you since you've been in the middle of that sausage factory.
Speaker Change: And.
Speaker Change: As a young.
Speaker Change: So that sort of emotional visceral what if we don't do this.
Speaker Change: Graduate John was making excellent Richard doesn't want me to talk any more about this but I'm going to.
Speaker Change: Plus themes.
Speaker Change: Hello.
Speaker Change: Very.
Speaker Change: Tactically he has really gotten into this very tactical kind of how do we do it.
Speaker Change: I am but I wont.
Speaker Change: I'm going to say something different okay, but you're right. This is totally sell them through the closing.
Speaker Change: The thing that led me to make.
Speaker Change: Well put.
Speaker Change: I think pretty positive comments about this last quarter, which I believe this quarter even more so.
Speaker Change: You know something that the inverse of what Steve just said is.
Speaker Change: What happens when somebody.
Speaker Change: Thanks Gwen.
Speaker Change: Out of pocket expenses, which every commercial planning United States has right, which Medicare has et cetera et cetera right.
Speaker Change: And your next question today will come from Allen Lutz with Bank of America. Please go ahead.
Speaker Change: Good afternoon, and thanks for taking the questions John going to Miss the one liner so congrats on the retirement.
Speaker Change: And they don't have access to one of these kinds of accounts. The answer is for every dollar that you are paying out of pocket you almost have to earn too right.
Speaker Change: One question for Steve going back to the potential Medicare expansion can you remind us just how that could theoretically work for health equity how should we think about your exposure to employers with Medicare populations as well as your exposure to health plan population that have access to meta.
Speaker Change: But when you get through with the tax at the federal taxes, the state taxes payroll taxes, social security taxes, right Sam take a bite.
Dan.
Speaker Change: That's one of the reasons.
Speaker Change: Bye.
Speaker Change: The pain of.
Speaker Change: Trying to understand how is the selling process to this type of population different or the same relative to your current customer base. Thanks.
Speaker Change: Out of pockets without access to these accounts, but without using them well.
Speaker Change: So seems so disproportionate.
Speaker Change: You actually have to earn so much more.
Speaker Change: Hey, Thanks Al I think great question, So we get.
Speaker Change: To do it it's just crazy that we would not be giving people. This access and it's trying to do it.
Speaker Change: Questions every day in our service center about the.
Speaker Change: 65 year old that.
Speaker Change: Inadvertently enrolled in Medicare part, a because Medicare told him he needed to where she needed to maintain there.
And.
Speaker Change: So that sort of emotional visceral what if we don't do this.
Speaker Change: Plus seeds.
Speaker Change: Their Medicare rates, but it turns out they really didn't need to and now they are making contributions into an HSA and theyre doing rolls, so they're ineligible and so there won't be an immediate savings to be able to say hey look we can we can rectify that situation and really that would that would remain true I mean, they could get could roll say, let's get those dollars into a hope account.
Speaker Change: Very.
Tactical he's he's really gotten into this very tactical kind of how do we do it is kind of the thing that led me to make.
Speaker Change: Think pretty positive comments about this last quarter, which I believe this quarter even more so.
Thanks Gwen.
Speaker Change: Or even with the HSA expansion efforts to pass the house ways and means committee next year that would help those working seniors that are in Medicare that was included in the Bill that was passed through the house ways and means committee. So in either one of those avenues.
Speaker Change: And your next question today will come from Allen Lutz with Bank of America. Please go ahead.
Speaker Change: Good afternoon, and thanks for taking the questions John are going to Miss the one liner so congrats on the retirement.
Speaker Change: We feel confident we could we could ramp up pretty quickly to take care of those folks as far as broader distribution.
Speaker Change: One question for Steve going back to the potential Medicare expansion.
Speaker Change: We as you know health equity, we're very lucky to have the largest.
Speaker Change: Can you remind us just how that could theoretically work for health equity how should we think about your exposure to employers with Medicare populations as well as your exposure to health plan population that have access to Medicare trying to understand how is the selling process to this type of population.
Speaker Change: Part of a group of partners Health plan partners in the United States, We've talked a lot about these in the past many many hospital systems and hospital system on health plans and the Blues Association.
Speaker Change: These are some of our closest partners.
Different or the same relative to your current customer base. Thanks.
Speaker Change: And most of these are nonprofits most of these folks do have Medicare populations pretty significant Medicare populations. In fact, I would tell you that most of our health plans. If you ask them. What is your fastest growing book of business at least one of them in the top couple would be would be Medicare MAA.
Speaker Change: Hey, Thanks, Alan Thanks, Great question, So we get.
Speaker Change: Questions every day in our service center about the.
Speaker Change: 65 year old that.
Speaker Change: Inadvertently enrolled in Medicare part, a because Medicare told him he needed to her she needed to to maintain there.
Speaker Change: Their Medicare rates, but it turns out they really didn't need to and now they are making contributions into an HSA and theyre doing the roles are ineligible and so there wont be an immediate savings to be able to say hey look we can we can rectify that situation and really that would that would remain true I mean, they could take a role we could see let's get those dollars into a hope account.
Speaker Change: And the like and so so we would use our Sim distribution channel, which is fantastic we would go to them and say look.
Speaker Change: We think we've built a great chassis to sell a more commercial products and now we've got hope accounts are now part of the equation or the expanded.
Speaker Change: Medicare HSA is that.
Speaker Change: Or even with the HSA expansion efforts have passed the house ways and means committee next year that would help those working seniors that are in Medicare that was included in the Bill that was passed through the house ways and means committee. So in either one of those avenues, we feel confident we could we could ramp up pretty quickly to take care of those folks as far as broader distribution.
Speaker Change: We've mentioned and let's go after this and and so.
Speaker Change: As a company that thinks about this thought leader I mean, our people are thinking about every day, we have to be very thoughtful about spending money that until this legislation is passed but but I can tell you theres a lot of a lot of thinking about it that's for sure.
Speaker Change: Hey, Steven Thanks, Alan.
We as you know health equity, we're very lucky and blessed to have the largest.
Speaker Change: Your next question today will come from Anne Samuel with Jpmorgan. Please go ahead.
Speaker Change: Part of a group of partners Health plan partners in the United States, We've talked a lot about these in the past many many hospital systems and hospital system and health plans.
Anne Samuel: Hi, guys. Thanks for the question.
Speaker Change: I'm, hoping you know I I know, you're not providing guidance at this point, but was hoping maybe you could just speak qualitatively, how youre selling season wrapped up and was there anything notably different this year versus prior years.
Speaker Change: And the Blues Association, where were these are some of our closest partners and and you know most of these are nonprofits. Most of these folks do have Medicare population is pretty significant Medicare populations. In fact, I would tell you that most of our health plans. If you ask them what is your fastest growing.
Speaker Change: Yeah.
So let me say first of all let me just repeat.
Speaker Change: <unk>.
Speaker Change: Careful observers will note that this is the first time I've ever made a comment.
Book of business at least one of them in the top couple would be would be Medicare N E and the like.
50, plus of these things about.
Speaker Change: A future sales number.
Speaker Change: I get it.
Speaker Change: And so so we would use our Sim distribution channel, which is fantastic we would go to them and say look.
Speaker Change: <unk>.
Speaker Change: Separately on <unk> I don't know if one of those words lately.
Speaker Change: We think we've built a great chassis to sell a more commercial products and now we've got hope accounts are now part of the equation or the expanded Medicare H S. A's.
Speaker Change: Those.
Speaker Change: And then what I did it.
Speaker Change: And I think that does reflect the view that we feel if you had asked us at the begin well you did at the beginning of or maybe it was mark on again, but somebody asked this at the beginning of the year.
Speaker Change: We've mentioned and let's go after this and and so you know as a company that thinks about this thought leader I mean, our people are thinking about every day.
Speaker Change: How we felt about the year on year sales comps.
Speaker Change: We said it was a very tough comp and to be in a position.
Speaker Change: To be very thoughtful about spending money that until this legislation is passed but.
Speaker Change: <unk>.
Speaker Change: The beat it and perhaps beat the record from two years ago is pretty good.
Speaker Change: But I can tell you theres a lot of a lot of thinking about it that's for sure.
Speaker Change: Yes.
Speaker Change: I think.
Speaker Change: If I look at within sales there are a couple of things I would point out.
Speaker Change: Thanks, Steve and thanks Alan.
Speaker Change: I think the biggest is that.
Speaker Change: Your next question today will come from Anne Samuel with Jpmorgan. Please go ahead hi.
Speaker Change: The opportunity that we see.
Speaker Change: This year was.
Speaker Change: Hi, Thanks for the question.
Speaker Change: And it goes back to the question that was asked earlier about <unk>.
Speaker Change: I'm, hoping you know I I know, you're not providing guidance at this point, but was hoping maybe you could just speak qualitatively to how your selling season.
Speaker Change: Margin growth.
Speaker Change: Given the success that we're having in increasing the value of an HSA.
Speaker Change: <unk> and was there anything notably different this year versus prior years.
Speaker Change: And now Thats kind of real and it's there.
Speaker Change: Yes.
Speaker Change: As well as kind of the related products that we've talked about that are starting to be in market and starting to get some traction.
Speaker Change: Yeah.
Speaker Change: So let me say first of all as let me just repeat.
Speaker Change: Hum.
Speaker Change: We felt like we could be particularly aggressive about HSA pricing.
Speaker Change: Careful observers will note that this is the first time I've ever made a comment.
Speaker Change: 50, plus of these things about.
Speaker Change: In particular.
Speaker Change: Not just in enterprise, but it's kind of upper middle market, and so forth and frankly with with distribution with the brokers and the like who have been.
A future sales number.
Speaker Change: I did it obliquely.
Speaker Change: Great work up to sleep, one of those words lately one.
Speaker Change: <unk> been great partners to us and so.
Speaker Change: One of those and.
Speaker Change: And then what I did it and I think that does reflect the view that we feel if you had asked us to begin well you did at the beginning of or maybe it was mark on them again, but somebody asked this at the beginning of the year.
Speaker Change: And we work.
Speaker Change: Conversely.
Speaker Change: Where we have lower margins right, which is some of our CDB products.
Speaker Change: We held the line.
Speaker Change: How we felt about the year on year sales comps we.
Speaker Change: And.
Speaker Change: And as you know in some cases increase prices.
Speaker Change: It was a very tough comp and to be in a position to.
Speaker Change: So I think that's the right answer.
Speaker Change: We want to sell what we think is durable business that is going to be good for the company and for our mission and so forth for a long period of time.
Speaker Change: To the beat it and perhaps to beat the record from two years ago. It was pretty good.
Speaker Change: I think.
Speaker Change: If I look at within sales there are a couple of things I would point out.
Speaker Change: And so that's probably the first and most important trend that we saw in the result of that is.
Speaker Change: I think the biggest is that.
Speaker Change: The opportunity that we saw this year was.
Speaker Change: We saw a lot more activity you may recall last year on a middle market was a little bit soft for us and <unk> well, we saw a lot more upper middle market middle market activity.
Speaker Change: And it goes back to the question that was asked earlier about.
Speaker Change: Margin growth was given the success that we're having in increasing the value of an HSA.
Speaker Change: And Thats, good enterprise, probably not quite as strong as last year as I think everyone's kind of trying to be as competitive as they can and enterprise Lan.
Speaker Change: And now that is kind of real and it's there.
Speaker Change: As well as kind of the related products that we've talked about that are starting to be in market and starting to get some traction.
Speaker Change: And again, there are areas, where we're going to hold the line where it's <unk>.
Speaker Change: We felt like we could be particularly aggressive about HSA pricing and particularly you know not just in enterprise, but it's kind of upper middle market, and so forth and frankly with with distribution with the brokers and the like.
Speaker Change: Standalone business that kind of doesn't make sense for us so.
Speaker Change: But again I think the big picture is increasingly adjusting our pricing as well as other aspects of what we're offering.
Speaker Change: Two.
Speaker Change: The ability the last thing I'll say here is that it.
Speaker Change: Who have been who have been great partners to us and so.
Speaker Change: We were really happy to be in a position, where we can start talking.
Speaker Change: And we work.
Speaker Change: Conversely.
Speaker Change: Talking with our clients and showing our clients and in some cases.
Speaker Change: Where we have lower margins right, which is some of our CDB products.
Speaker Change: Selling in and sending our clients on our new product pipeline.
Speaker Change: We held the line.
Speaker Change: And so.
Speaker Change: And as you know in some cases increase prices and so I think that's the right answer.
Can you talk a little more about that if someone wants to but.
Speaker Change: That not only I think they have made a difference for us but the goal in fiscal in the in this sales cycle will get to a place where we're starting to get a little revenue next year from this stuff.
Speaker Change: We want to sell what we think is durable business that is going to be good for the company, but for our mission and so forth for a long period of time and so that's probably the first and most important trend that we saw in the result of that is.
Speaker Change: We had really good like some people call Bell Cal clients I'm not sure that that sounds it doesn't sound as good as it is a bell curve.
Speaker Change: And.
Speaker Change: We saw a lot more activity you may recall last year on a middle market was little bit soft for us and <unk>, we saw a lot more upper middle market middle market activity.
Speaker Change: Pilot.
Speaker Change: Highland implies months, yes.
Speaker Change: That's helpful.
Speaker Change: Early adopter so early adopters.
Speaker Change: And.
Speaker Change: You've always been here for me, what we said last quarter and and so.
Speaker Change: And that's good enterprise, probably not quite as strong as last year, because I think everyone's kind of trying to be as competitive as they can and enterprise Lan.
Speaker Change: That's.
Speaker Change: I think really valuable and.
Speaker Change: It's useful for us this year, but I think we'll be even more so next year.
Speaker Change: And again, there are areas, where we're going to hold the line where it's.
Speaker Change: Thanks Pam.
Speaker Change: Standalone business that kind of doesn't make sense for us so.
Speaker Change: And your next question today will come from George Hill with Deutsche Bank. Please go ahead.
Speaker Change: But again I think the big picture is increasingly adjusting our pricing as well as other aspects of what we're offering.
George Hill: Yes operated evening guys that agility.
George Hill: You got to watch this operator, he's like you talk.
Their profitability is the last thing I'll say here is that.
Speaker Change: That's it.
Next on this so if you don't it doesn't come out at the beginning and incoming out apparently.
Speaker Change: We were really happy to be in a position, where we could start talking.
Speaker Change: Yes, John did you guys change the hold music like that's not really my core question, but it sounded like the weighting music before the call.
Talking with our clients and showing our clients and in some cases Seth.
Speaker Change: Selling in and sending our clients on our new product pipeline.
Speaker Change: Can you just let you guys know, Ohio, Spanish Qatar thing.
Speaker Change: And so.
Speaker Change: I mean.
Speaker Change: Can you talk a little more about that if someone wants to but.
I don't know if its interesting you mentioned that because I personally have lobbied for snoopy for a long time and.
Speaker Change: That not only I think has made a difference for us but the goal in fiscal in the in this sales cycle will get to a place where we're starting to get a little revenue next year from this stuff.
Speaker Change: There is a company I won't name them, but that is oftentimes affiliated with Snoopy that is now one of our enhanced rates partners.
Speaker Change: Well, we had really good you know like some people call Bell Cal clients I'm not sure that that sounds it doesn't sound as good as it is a bell curve.
Speaker Change: And.
Speaker Change: Maybe we can get that for next quarter.
Speaker Change: Okay, well, John first of all I wish you well I'll say, Scott welcome aboard and I Hope that you keep the flavor of this call the same and I might pepper you with an S question every call and again all of it.
Speaker Change: And pilot.
Speaker Change: That implies months, yes.
Speaker Change: Hum.
Speaker Change: Early adopters early adopters.
Speaker Change: And.
Speaker Change: And if theres a pair of strangelove tunks laying around stock X on your way out the door on a size nine and a half.
Speaker Change: You've always been here for me, what we said last five six quarters and and so.
Speaker Change: Hum.
Speaker Change: Look that's.
Speaker Change: Two quick questions.
Speaker Change: That's I think really valuable and useful for us this year, but I think we'll be even more so next year.
Speaker Change: George $9 five I like it.
Speaker Change: It might have.
Speaker Change: Thanks Pam.
Speaker Change: Jim as it relates to the $8 million impact that you cited are related to the photo pack. So am I just reading the financials right that you guys basically absorb that reported gross profit numbers in the quarter, so numbers effectively would've been higher.
Speaker Change: And your next question today will come from George Hill with Deutsche Bank. Please go ahead.
George Hill: Yeah, Good evening guys.
You got to watch out this operator, he's like you talk and that's it good job.
Speaker Change: And then John and Steve.
Speaker Change: The expansion into the Medicare space, one of the things I think about when I look at that space as I assume you guys are talking about the traditional Medicare a plus b business and not the MA business is a lot of those guys kind of offer a lot of their own cards. So the question would be do you see this as something supplemental is it something that would be portable in addition to those benefits.
Speaker Change: Next on this so if you don't it doesn't come out at the beginning it Ain't coming out apparently.
Yeah, but but but John did you guys change the hold music like that's not really my core question, but it sounded like the weighting music before the call.
All of our numbers change like you guys are Spanish guitar thing.
I mean, you know.
Tend to expire at year end or is there an opportunity to work with the carriers to provide something that looks enhanced.
It's interesting you mentioned that because I personally have lobbied for snoopy for a long time and.
Speaker Change: Because I'm sure that you've got a lot of what's going on with the pending legislation better than ideal.
Speaker Change:
Speaker Change: There's a company I won't name them, but that is oftentimes affiliated with Snoopy that is now one of our enhanced rates partners and.
Speaker Change: I will drop off thank you.
Speaker Change: Why don't you take the first part and I'll take yes, and what well done sneaking in two questions. There that was there. So yes. So let me just clarify on that.
Speaker Change: You know.
Speaker Change: Maybe we can get that for next quarter.
Speaker Change: Okay, well, John first of all I wish you well I'll say, Scott welcome aboard and I Hope that you keep the flavor of this call. It the same and I might pepper you with an S question every call and again all of that and if there's a pair of strange loved tongue slaying around stock X on your way out the door I'm a size nine and a half.
Speaker Change: $8 million.
Speaker Change: That was excess service costs across the board so sort of ahead of our of our expectations. Yes. It was absorbed into the number.
But that is not just related to the fraud activity that we mentioned, but but also sort of elevated member contacts yet some of that related related to fraud, but also some of that related to as John mentioned. This was our largest wave of the card migration, we put new new chip cards.
Speaker Change: Two part question.
Speaker Change: He's right now Dan and George $9, five I like it like a man and a half.
Speaker Change: Hum.
Speaker Change: Jim as it relates to the $8 million impact that you cited are related to the fraud and pack. So am I just reading the financials right that you guys basically absorbed that in our reported gross profit numbers in the quarter, so numbers effectively would've been higher.
Speaker Change: Mobile wallet ready cards into many many many months hence.
Speaker Change: And of course, perhaps we should have.
Speaker Change: And then John and Steve.
Speaker Change: You would have anticipated some of that incremental volume that.
Speaker Change: The expansion into the Medicare space, one of the things I think about when I look at that space as I assume you guys are talking about the traditional Medicare H plus P business and not the EMEA business as a lot of those guys kind of offer a lot of their own cards. So the question would be do you see this as something supplemental is it something that would be portable in addition to those benefits.
Speaker Change: That would come our way just the normal noise of a big of a big operational project like that but.
Speaker Change: We did not so so the two pieces there I just want to highlight that thats $8 million of just excess service service costs related to both of those items.
Speaker Change: Tend to expire at year end or is there an opportunity to work with the carriers to provide something that looks enhanced all because I'm sure that you've got a lot of what's going on with depending legislation better than I do.
Speaker Change: And on your second question.
Speaker Change: I think youre kind of getting into the fun of this which is it.
Speaker Change: And it does go back a little bit to the question about distributions. So.
Speaker Change: One of the values in my view of having.
Speaker Change: I'll drop after that Okay. Why don't you take the first part and I'll take yes, well done sneaking in two questions. There that was there. So yes. So let me just clarify on that so the 8 million that was excess service costs across the board. So sort of ahead of our of our expectations. Yes. It was absorbed in.
Speaker Change: The stack card infrastructure now entirely in place is let's say you have an MA product that.
Speaker Change: What comes with it is a $200 of out of pocket assistance right.
Speaker Change: Well now we can put that alongside of.
Speaker Change: If we had hoped.
Speaker Change: Two the number but.
Speaker Change: We put that alongside of our hope account or.
Speaker Change: But that is not just related to the fraud activity that we mentioned, but but also sort of elevated member contacts yet some of that related related to fraud, but also some of that related to as John mentioned. This was our largest wave of the card migration, we put new new chip cards.
Speaker Change: Or it might be the case, but that 200 Bucks a day 300 Bucks. If it were contributed into the hope account right because it's not just money for anything kind of a thing so.
Speaker Change: Do you think that there is opportunity in M&A as well as in conventional Medicare.
Speaker Change: For these kind of products.
Speaker Change: Mobile wallet ready cards into many many many months, hence and of course, you know, perhaps we should have a <unk>.
Speaker Change: And we're trying to position the infrastructure to support both those opportunities.
George Hill: Thanks George.
Speaker Change: Have anticipated some of that incremental volume.
Speaker Change: And your next question today will come from Mark Marcon with Baird. Please go ahead.
Speaker Change: That would come our way just as it had been normal noise of a big of a big operational project like that but you know.
Mark Marcon: Good afternoon, everybody, John we're going to absolutely Monsieur best wishes in retirement, Scott welcome aboard for Great things about you from colleagues that I worked with have worked with you in the past. So we're looking forward to working with you.
Speaker Change: We did not so so the two pieces there I just want to highlight that that's $8 million of just excess service service costs related to both of those items.
Speaker Change: And on your second question.
Speaker Change: I think you kind of get into the fun of this which is it does it does pull back a little bit to the question about distributions. So.
Speaker Change: <unk>.
Speaker Change: Question relates to the guidance.
Speaker Change: Specifically, Jim or John could you discuss a little bit about like what your expectations are that go into the into the 20.
Speaker Change: One of the values in my view of having.
Speaker Change: The stack card infrastructure now entirely in place is let's say you have an M a product that.
26 guidance with regards to occur.
Speaker Change: What comes with it is a $200 of out of pocket assistance right.
Speaker Change: Account growth and are there any things that are that are changing it sounds like the selling season went really well.
Speaker Change: Well now we can put that alongside of.
Speaker Change: And so I'm wondering what could potentially change that trajectory has there been any.
Speaker Change: If we had hoped.
Speaker Change: We put that alongside of our hope account or it might be the case, but that 200 Bucks a day 300 Bucks. If it were contributed into the hope account right because it's not just money for anything kind of a thing so.
Speaker Change: Client retention staying strong.
Speaker Change: Has there been any negative impact with regards to the fraud activity any color that you could provide there in terms of what drives the HSA growth for next year, yes. So from let's just start with HSA retention, we feel real good about where we are going into fiscal 'twenty six year.
Speaker Change: Do you think that there's opportunity in N a as well as in conventional Medicare.
Speaker Change: For these kind of products.
Speaker Change: And we're trying to position the infrastructure to support both of those opportunities.
Speaker Change: Theres nothing.
George Hill: Thanks George.
Speaker Change: Theres not assume that we're not dropping here.
And your next question today will come from Mark Marcon with Baird. Please go ahead.
Speaker Change: On the <unk> side.
Speaker Change: And this is sort of the flip side of <unk>.
Speaker Change: Of incremental price increases that have now had the ability to work through the system in and some of what I said earlier.
Speaker Change: Hey, good afternoon, everybody I'm, John we're going to absolutely Miss you best wishes in retirement, Scott welcome aboard for Great things about you from colleagues that I work with that have worked with you in the past. So we're looking forward to working with you.
There I think as we go through fiscal 'twenty six I think we could see some healthy churn.
Speaker Change: Anytime there is churn CEO is always say it's healthy.
George Hill: Sure.
Speaker Change: Question relates to the guidance.
Speaker Change: And in this case, that's actually true.
Speaker Change: Specifically, Jim or John could you discuss a little bit about like what your expectations are that go into the into the 26 guidance with regards to.
Speaker Change: And so.
Speaker Change: I think theres some of that but.
Speaker Change: Theres nothing I don't think theres any sort of.
Speaker Change: I think the gist of your question is is there.
Speaker Change: A big shoe to drop there.
Speaker Change: Account growth and are there any things that are that are changing it sounds like the selling season went really well.
Speaker Change: I don't think so and Thats why <unk>.
Speaker Change: You kind of look at it.
Speaker Change: One of the reasons that margin gets gets substantially healthier.
Speaker Change: And so I'm wondering what could potentially change that trajectory has there been any.
Speaker Change: Next year, I mean, youre looking at it as I said.
Speaker Change: In the middle of the <unk>.
Speaker Change: <unk> share of 42% EBIT margins and.
Speaker Change: Client retention staying strong has there been any negative impact with regards to the fraud activity any color that you could provide there in terms of what drives the HSA growth for next year, yes. So from a let's just start with HSA retention, we feel real good about.
Then I guess to your point.
Speaker Change: We don't see.
Speaker Change: Yes.
Speaker Change: Much in the way of trailing costs from the incidents that we've seen.
Nor have they.
Speaker Change: Really impacted our sales cycle, although I mean, it's I don't have a counter factual in front of me. So I'm sure that there has been some probably some cases, where these have had an impact on either retention or sales I know they've had an impact on our team that worked at Butler.
Speaker Change: Where we are going into fiscal 'twenty six year.
Speaker Change: There's nothing there's not a shoe that we're not dropping here.
Speaker Change: On the <unk> side.
Speaker Change: And this is sort of the flip side of <unk>.
Speaker Change: But.
Speaker Change: So.
Speaker Change: Incremental price increases that have now had the ability to work through the system in and some of what I said earlier.
Speaker Change: I think things are looking.
Speaker Change: I think when you see the account totals.
Speaker Change: Coming into 2006, I think youll.
Speaker Change: There I think as we go through fiscal 'twenty six I think we could see some healthy churn.
Speaker Change: Hoping certainly our forecast is that you will feel good about them.
Speaker Change: <unk>.
Speaker Change: But we will be a little bit on the lookout for some attrition in the CDB side simply because we have raised price.
Speaker Change: Anytime there's churn CEO is always say it's healthy.
Speaker Change: And in this case, that's partially true.
Mark Marcon: Thanks Mark.
Speaker Change: And so.
Speaker Change: And your next question today will come from David Roman with Goldman Sachs. Please go ahead.
Speaker Change: I think theres some of that but.
Speaker Change: Theres nothing I don't think theres any sort of.
Speaker Change: I think the Gist of your question is is there a.
Speaker Change: Thank you and good afternoon, everyone, John I'm, sorry, I won't have an opportunity to work with you more of an appreciate all your help as we've gotten up to speed here and look forward to following the stock going forward.
Speaker Change: Big shoe to drop there.
Speaker Change: I don't think so and that's why if you kind of look at it as one of the reasons that margin gets gets substantially healthier.
Speaker Change: Paying whatever it is.
Speaker Change: You do next.
Speaker Change: Next year, I mean, youre looking at and as I said.
Speaker Change: Maybe as I, just said kind of transition here.
Speaker Change: There are a lot of questions about the 26 guidance.
Speaker Change: In the middle of the <unk>.
Speaker Change: Range here, 42% EBIT margins and.
Speaker Change: Excuse me.
Speaker Change: Maybe you could talk through a little bit more detail, how we should think about capital allocation, both internal and external as you roll forward here, you've obviously done some acquisitions like the <unk>, one and a few others over time that are.
Speaker Change: And then I guess to your point.
Speaker Change: We don't see.
Speaker Change: Much in the way of trailing costs from the incidents that we've seen.
Speaker Change: Paid benefits here to the company you've seen a big years Euro increases in operating expenses across technology and development as well as sales and marketing. So how should we think about kind of your resource prioritization.
Speaker Change: Nor have they.
Speaker Change: Really impacted our sales cycle, although I mean, it's I don't have the counter factual in front of me. So I'm sure that there has been some probably some cases, where these have had an impact on either retention or sales I know they've had an impact on our team that worked there bought off.
Speaker Change: All of that fits into the growth rates, you've laid out here for 2006 and beyond.
Speaker Change: But.
Speaker Change: So I think things are looking.
Speaker Change: Now I'll, just say first and then throw to Jim Your question reminded me of something that we.
Speaker Change: I think when you see the account totals.
Jim: Could it stress, which is our fiscal 'twenty six does not assume M&A activity because that isn't how we do it.
Speaker Change: Coming into 2006, I think youll.
Hoping certainly our forecast isn't you'll feel good about them and.
Speaker Change: But we will be a little bit on the lookout for some attrition in the CDB side simply because we have raised price.
Jim: Either large ball small ball whatever size ball.
Jim: But.
Jim: That doesn't mean, they won't try so.
Jim: Yes, exactly and we've talked about.
Mark: Thanks Mark.
Speaker Change: And your next question today will come from David Roman with Goldman Sachs. Please go ahead.
Many many times before.
Sales and marketing we try to operate in an envelope and it's been operating in an envelope of eight eight ish percent of revenue, but a little bit a little bit light of that.
David Roman: Thank you and good afternoon, everyone that John I'm, sorry, I won't have an opportunity to work with you more but I. Appreciate all your help as we've gotten up to speed here and look forward to following the stock going forward and are being whatever it is.
Jim: Thus far this year Tech and Dev, we've talked about 22 ish percent being being the high watermark, we're spending quite a bit lower than that in the last quarter, we talked about hey, we'd actually like that to be a little bit more.
David Roman: You do next.
Speaker Change: Maybe it's just that kind of transition here.
Speaker Change: There are a lot of questions about the 26 guidance excuse me.
Speaker Change: But maybe you could talk through a little bit more detail, how we should think about capital allocation, both internal and external as you roll forward here, you've obviously done some acquisitions like the wage works, one and a few others over time that are.
But it takes time to ramp up to ramp resources and some timing of project projects starts. So you shouldnt expect anything materially different from that.
Speaker Change: Paid benefits here to the company you've seen a big year here.
Jim: Going forward and then on so yes sort of capital allocation sort of John alluded to it than I did in the remarks, right, where we're obviously returning returning capital to shareholders. Currently we've got an authorization.
Speaker Change: Creases in operating expenses across technology and development as well as sales and marketing. So how should we think about kind of your your resource prioritization and how that fits into the growth rates you've laid out here for 26 and beyond.
Jim: In place.
Jim: We are paying down the revolver.
And now I'll, just say first and then throw to Jim. Your question reminded me of something that we we could've stressed which is our fiscal 'twenty six does not assume M&A activity because that isn't how we do it.
Jim: <unk> talked to you before like Hey, we bought we bought a couple of hundred plus million dollars to fund the benefit wallet acquisition, let's get that let's get that paid off over time with excess cash flow.
Jim: That is that that revolver becomes a night.
Either large ball small ball whatever size ball.
Bucket to be able to finance the next deal of that size should it should it come.
Speaker Change: But that doesn't mean they won't try some.
Speaker Change: Yeah, exactly and we've talked about.
And then aiming for a leverage profile.
Jim: Our leverage profile gets better and better each quarter as we're growing the denominator of the leverage ratio and.
Speaker Change: I met many many times before that.
Speaker Change: Sales and marketing we try to operate in an envelope and it's been operating in an envelope of eight eight ish percent of revenue, but a little bit a little bit light of that.
Jim: That leaves us ample capital if a larger opportunity were to come its way right I still fundamentally believe that some of these HSA portfolio acquisition. There are some of the best ROI investments, we can make but we're continuing to fund the business within within the.
Speaker Change: Thus far this year Tech and Dev, we've talked about 22 ish percent being a being the high watermark, we're spending quite a bit lower than that in last quarter, we talked about hey, we'd actually like that to be a little bit more but it takes time to ramp up to ramp resources and some timing of project projects.
The envelope of cost and sales and marketing and <unk> that we have in.
Jim: And continuing to drive EBITDA margin enhancement, along the way so I think thats a.
Jim: The sum of all of those things are very positive for our for the story.
Speaker Change: So you Shouldnt expect anything materially different from that.
Speaker Change #100: Thanks, David.
Speaker Change: Going forward and then on so yes sort of capital allocation sort of John alluded to it than I did in the remarks, right, where we're obviously returning returning capital to shareholders. Currently we've got an authorization in.
Speaker Change #101: Your next question today will come from David Larsen with BTG. Please go ahead.
David Larsen: I was hoping Scott Cutler could talk a little bit about what are you sort of most proud of with what you get in stock action.
Speaker Change: In place.
Speaker Change: We are paying down the revolver.
Speaker Change #103: Maybe what he thinks he can bring to health equity related to those accomplishments. Thanks so much.
Speaker Change: <unk> talked to before like Hey, we bought we bought a couple of hundred plus a million dollars to fund the benefit wallet acquisition, let's get that let's get that paid off over time with excess cash flow and that is that that revolver becomes a nice.
Speaker Change #104: Oh greatest stock X question of that.
Speaker Change #105: No I mean.
Speaker Change #105: As I stated in my prepared remarks, I think what excited me about my career journey has really been about leveraging technology and applying it to both different markets have different problems from financial services to consumer ecommerce and I'll have to figure out a way to get George there's the sneakers.
Speaker Change: Bucket to be able to finance the next deal of that size should it should it come.
Speaker Change: And then aiming for a leverage profile.
Speaker Change: Our leverage profile gets better and better each quarter as we're growing the denominator of the leverage ratio and that leaves us ample capital if a larger opportunity where work should come its way right I still fundamentally believe that some of these HSA portfolio acquisition. There are some of the best ROI.
Speaker Change #105: But I think what really gets me excited about the opportunity here is really just the continued.
Speaker Change #105: Use of technology, and we're probably in the most exciting time to be able to leverage technologies around data and AI, particularly for the member and the client partner experience and so.
Speaker Change: Investments, we can make but we're continuing to fund the business within within the envelope of cost and sales and marketing and tech and Dev that that we have.
Speaker Change #105: I for one I'm really excited about the platform the strength of health equities market position and also equally excited about the <unk>.
Speaker Change: And continuing to drive EBITDA margin enhancement, along the way so I think that's a.
Continued use of technology to make that service more widely available.
Speaker Change: The sum of all of those things are very positive for our for the story.
Speaker Change #105: And a better service.
Thanks, David.
Speaker Change #105: Shell is is kind of what I was most proud about in lots of different chapters in my career and certainly what I hope to be able to bring.
Speaker Change: Your next question today will come from David Larsen with BTG. Please go ahead.
Speaker Change: I was hoping Scott Cutler could talk a little bit about what are you sort of most proud of with what you get in stock action.
Speaker Change #105: To bring here and so I'm excited about that.
And your next question today will come from Steven Valiquette with Mizuho Securities. Please go ahead.
Speaker Change: Maybe what are you what he thinks he can bring to health equity related to those accomplishments. Thanks so much.
Speaker Change: Oh greatest stock X question like that.
Speaker Change #106: Great. Thanks, and good afternoon, everyone John.
Speaker Change: I mean, you know as I as I.
Speaker Change #106: Congrats on your retirement and Scott Congrats on joining the company shortly here.
Speaker Change: Stated in my prepared remarks, I think what excited me about my career journey has really been about leveraging technology and applying it to both different markets have different problems from financial services to consumer ecommerce and Oh I have to figure out a way to get a George those are those sneakers.
Speaker Change #106: Got you.
Speaker Change #107: Really my questions here are just more on the just confirmation on the the dollar amount of HSA cash custodial asset contracts your pricing each fiscal year.
Speaker Change #107: Previous slide deck, you had a $3 4 billion for fiscal 'twenty six now the 10-Q shows I went down a little bit, but then in fiscal 'twenty seven went up a little bit.
Speaker Change: But I think what really gets me excited about the opportunity here is really just the continued.
Speaker Change #107: The yields are still about the same but really my question is just to try to.
Speaker Change: Use of technology, and we're probably in the most exciting time to be able to leverage technologies around data and AI, particularly for the member and the client partner experience and so.
Reconcile for so as of.
Speaker Change #107: Right now the $3 2 billion Thats set to reprice in fiscal 'twenty six how much of that will happen sort of early in the year versus potentially later in the year just to figure out how much is baked into the <unk>.
Speaker Change: I for one I'm really excited about the platform the strength of health equities market position and also equally excited about.
Speaker Change #107: The guidance or will be recognized in fiscal 'twenty six and then on a similar vein when you talked to it earlier on the call about pulling forward. Some of these re pricings im assuming some of that might have been the fiscal 'twenty seven maturities unless I'm wrong, but again just to confirm is any of that baked another fiscal 'twenty six guidance or would that be upside relative to your initial view that you gave today on FY 'twenty.
Speaker Change: The continued use of technology to make that service more widely available at a better and a better service I mean in a nutshell is is kind of what I was most proud about in lots of different chapters in my career and certainly what I hope to be able to bring.
Speaker Change #108: Yeah. Thanks for that thanks for that question yeah, good to clarify so.
Speaker Change: To bring here and so I'm excited about that.
Speaker Change #108: Yes, seasonally very little revenue or very little of the HSA cash would mature in a normal year early in the year.
Speaker Change: And your next question today will come from Steven Valiquette with Mizuho Securities. Please go ahead.
Speaker Change #108: Most of it happens later in the year as you rightfully say 26 as got some legacy wage works cash that was placed five years. Prior so we do have a slot that that matures in the middle of the year. Those are the types of things like that kind of 691 year.
Steven Valiquette: Great. Thanks, Good afternoon, everyone. John Congrats on your retirement and Scott Congrats on joining the company I shortly here as a CEO.
Steven Valiquette: Really my questions here are just more on the just confirmation on the the dollar amount of HSA cash custodial asset contracts your pricing each fiscal year previous.
<unk> <unk>.
Speaker Change #108: Type of maturities that we'd be looking to potentially pull forward to reprice.
Steven Valiquette: Previous slide deck, you had a $3 4 billion for fiscal 'twenty six now in the 10-Q shows I went down a little bit, but then in fiscal 'twenty seven went up a little bit.
Speaker Change #108: Not two plus years, not two plus years out like those kind of contracts there would be a little tougher and tougher to modify with that with that long a runway.
Steven Valiquette: The U S are still about the same but really my question is just to try to.
Speaker Change #108: But yet all of these expected actions would be priced into our current guidance right like theres not a right.
Steven Valiquette: Reconcile for so as of.
Right now the $3 2 billion, that's set to reprice in fiscal 'twenty six how much of that will happen sort of early in the year versus potentially later in the year just to figure out how much is baked into the guidance or will be recognized in fiscal 'twenty six and then the on a similar vein when you talked to it earlier on the call about pulling forward. Some of these repricing as I'm, assuming some of that might have been.
Speaker Change #108: And you can kind of think about it like if you were buying.
Speaker Change #108: These are not real hedges are you'd see that way yes.
Speaker Change #108: But if you sort of said well, let's move this up six months.
Okay, what's going to be the true cost of that and it's going to be the present value of that six months, what would be that six months hedged and yet where we can get a deal thats much better than that we're going to pull the trigger on it where we can't we're not and so.
Steven Valiquette: Fiscal 'twenty seven maturities unless I'm wrong, but again just to confirm is any of that baked into the fiscal 'twenty six guidance or would that be upside relative to your initial view that you gave today on FY 'twenty, yes. Thank god.
Speaker Change: Yes, thanks for that thanks for that question yeah, good to clarify so.
Speaker Change #108: We.
Speaker Change #108: We baked in some assumptions that some of these dollars would come a little earlier, but they would probably come at.
Speaker Change: Seasonally very little.
Speaker Change: Revenue very little of the HSA cash would mature in a normal year early in the year.
Speaker Change #108: Some percentage of that cost for lack of a better term discounts. So I would not be looking for.
Speaker Change: Most of it happens later in the year.
Speaker Change: As you rightfully say 26 as got some legacy wage works cash that was placed.
Speaker Change #108: A ton of up or down on this topic, it's just what it really is.
Speaker Change #109: Steve you of all people know this one is.
Speaker Change: Five years prior so we do have a slot that that matures in the middle of the year, but those are the types of things like that kind of 691 year out.
Speaker Change #109: Our goal longer term is to create.
Speaker Change #109: More maturity I'm, sorry, more stability in this line right because it really ultimately isn't fee. So if we can.
Speaker Change: Type of maturities that we'd be looking to potentially pull forward to reprice.
Speaker Change #109: Do that by bringing things a little bit forward then that's the that's the reason we're doing it it's not to get a few extra dollars.
Speaker Change: Not two plus years, not two plus years out like those kind of contracts there would be a little tougher and tougher to modify with that with that long of a runway.
Speaker Change: But yet all of these expected actions would be priced into our current guidance right. Later is not right and if you kind of think about it like if you were buying.
Speaker Change #110: Thank you your next question.
Speaker Change #110: Sorry go ahead.
Speaker Change #110: Oh go ahead.
Speaker Change #111: Okay and your next question today will come from Sean Dodge with RBC capital markets. Please go ahead.
Speaker Change: These are not real hedges or you'd see at way yes.
Hey, good afternoon. This film's color on for Shaun.
Speaker Change: But if you sort of said well, let's move this up six months.
Speaker Change #112: Welcome Scott and congratulations again on their terms.
Speaker Change: Okay, what's going to be the true cost of that and it's going to be the present value of.
Speaker Change #112: So I'll switch gears here and do a quick check in on the commuter offering.
Speaker Change: That six months, what would be that six months hedged and yet where we can get a deal that's much better than that we're going to pull the trigger on it where we can't we're not and so it it it.
Speaker Change #113: Where do we stand relative to the pre pandemic levels, there and how should we be thinking about that business in fiscal 2000.
Speaker Change #113: Thanks.
Speaker Change #114: Well I'll give a quick answer to this one.
Speaker Change: We baked in some assumptions that some of these dollars would come a little earlier, but they would probably come that some percentage of that cost for lack of a better term discounts. So I would not be looking for.
It's been pretty stable at.
Speaker Change #114: Call it.
Speaker Change #114: 60%, maybe 65% of its pre pandemic revenue base.
Speaker Change #114: And if it grows a little bit, but it's not gone crazy, we will see at some of the.
Speaker Change: Ton of up or down on this topic. It's just what it really is is it.
Speaker Change #114: We'll be happy to see you know the federal employees seem to be going back to work that.
Speaker Change: Steve you of all people know this one is.
Speaker Change: Our goal longer term is to create.
That would be good but.
Speaker Change #114: That's about it.
Speaker Change: More.
Speaker Change #114: We're not an interim.
Speaker Change: <unk> I'm, sorry, more stability in this one right because it really ultimately is a fee so.
Speaker Change #114: Not terribly material the delta one way or the other.
Speaker Change #114: A good business, but it's a it's a good especially in terms of sort of service margin. It's a really good business.
Speaker Change: We can do.
Speaker Change: Do that by bringing things a little bit forward then that's the that's the reason we're doing it it's not to get a few extra dollars.
Speaker Change #114: But.
Speaker Change #114: That's kind of what I'd expect.
Speaker Change #115: I will conclude our question and answer session I would like to turn the conference back over to Jon Kessler for any closing remarks.
Speaker Change: Your next question.
Speaker Change: Sorry go ahead.
Oh go ahead.
Speaker Change: Okay and your next question today will come from Sean Dodge with RBC capital markets. Please go ahead.
Jon Kessler: Okay well.
Jon Kessler: That is a wrap.
Speaker Change: Hey, Good afternoon. This is thomas color on for Shaun.
Jon Kessler: For this b plus Canadian and.
Speaker Change: Welcome Scott and congratulations again on there John.
Jon Kessler: No.
Jon Kessler: I'm going to say I'm, leaving the stage here, but I do not want to do so without everyone. Here understanding the team that has over delivered again and again and again and that that team is stronger and deeper than it's ever been before.
Speaker Change: So I'll switch gears here and do a quick check in on the commuter offering.
Speaker Change: Where do we stand relative to the pre pandemic levels, there and how should we be thinking about that business in fiscal 'twenty and beyond.
Speaker Change: Well I'll give a quick answer to this one.
Jon Kessler: And with that.
Speaker Change: It's been pretty stable at.
Speaker Change #116: And Steve.
Speaker Change: You know call it.
Speaker Change #116: <unk> leaders, who are intensely committed intensely committed to <unk> success and at the same time both of these individuals.
Speaker Change:
Speaker Change: 60% of maybe 65% of its pre pandemic revenue base.
Speaker Change: And if it grows a little bit, but it's not gone crazy, we will see at some of the.
Speaker Change #116: And my observation in one case over a long time and the other case over a medium time.
Speaker Change: We'll be happy to see you know the federal employees seem to be going back to work that.
Speaker Change #116: Our.
Speaker Change #116: Genuinely personally humble about.
Speaker Change #116: Their role in that and there will be certain leadership.
Speaker Change: That would be good but.
Speaker Change: But that's about it.
Speaker Change: We're not we're not and in truth, it's not terribly material the delta one way or the other.
Speaker Change #116: It's really a remarkable combination that I believe as a shareholder is going to serve this company very very well so to the whole team.
Speaker Change: It's a good business, but it's a it's good especially in terms of sort of service margin. It's a really good business.
Speaker Change #116: Purple I really want to just end by saying thank.
Speaker Change #117: Thank you.
Speaker Change: Uh huh.
Speaker Change #117: Not for what you've done but for what it is that I believe in my heart is going to be done in pursuit of our mission.
Speaker Change: That's kind of what I'd expect.
Speaker Change: I will conclude our question and answer session I would like to turn the conference back over to Jon Kessler for any closing remarks.
Speaker Change #118: As well as I can say so.
Speaker Change #118: A value for.
Speaker Change #118: US we shareholders.
Jon Kessler: Okay well.
Speaker Change #118: Is it us or weak.
Speaker Change: <unk>.
Speaker Change #118: And with that I'll I'll I think that's the best way I could possibly end is by thanking the team. So thanks, all and.
Speaker Change: That is a wrap.
Speaker Change: For this b plus Canadian and.
Speaker Change: No.
Speaker Change #118: How fun.
Speaker Change: I'm going to say I'm, leaving the stage here, but I do not want to do so without everyone here understanding the team.
Speaker Change #119: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: <unk> has over delivered again, and again and again and that that team is stronger and deeper than it's ever been before.
Speaker Change: And with Scott and Steve.
Speaker Change: It has leaders who are intensely committed intensely committed to team's success and at the same time you both of these individuals.
Speaker Change: In my observation in one case over a long time and the other case over a medium time are.
Speaker Change: Genuinely personally humble about.
Their role in that and there will be certain leadership.
Speaker Change: It's really a remarkable combination that I believe as a shareholder is going to serve this company very very well so to the whole team at <unk>.
Speaker Change: Purple I really want to just end by saying thank.
Speaker Change: Thank you.
Not for what you've done but for what it is that I believe in my heart is going to be done in pursuit of our mission.
Speaker Change: As well as I can say so.
Suite of value for us.
Speaker Change: We shareholders.
Speaker Change: Is it us or weak spot.
Speaker Change: And with that I'll I'll I think that's the best way I could possibly end is by thanking the team. So thanks, all and.
Speaker Change #100: How fun.
Speaker Change #101: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change #101: Yeah.
Speaker Change #101: Okay.
[music].