HealthEquity, Inc. (NASDAQ:HQY) Q3 2020 Earnings Conference Call - Final Transcript

Dec 03, 2019 • 04:30 pm ET

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HealthEquity, Inc. (NASDAQ:HQY) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question comes from Anne Samuel with JP Morgan. Your line is now open.

Executive
Jon Kessler

Hi, Anne.

Analyst
Anne E. Samuel

Hi, guys. Thanks for taking the question and congrats on the great quarter.

Executive
Jon Kessler

Thank you.

Analyst
Anne E. Samuel

My first question is really on the synergies. I was hoping maybe you could parse out what came on sooner than you expected now that you think you can achieve your target earlier than the expected 24 months to 36 months?

Executive
Jon Kessler

Yeah. I'll comment generally and then ask either Darcy or Ted, if they'd like to add. In general, what we're seeing is, that on the cost side, we -- at least on the cost side. Cost side, we've been able to make more progress, I think sooner than we expected. And I think that just generally reflects a level of teamwork across Legacy HealthEquity, Legacy WageWorks and really an embracing a process and the fact that very generally that Ted and our integration team have managed it effectively. It also reflects level of diligence that was done in this regard. And so the cost side, I think is something that we feel real pleased about where we are and as Ted said, I think not only we will be able to get there, but once we get there, we can stop talking about synergies, but we'll still be talking about business efficiency and I think there'll be more to do.

On the revenue side, I think the biggest things that we've been able to do are: first, involves something that it sounds very technical, but it is really important, which is we've been able to separate out on the WageWorks side, the legacy what we refer to as client health funds in the CDB benefits from the company's operating cash and that's -- as Ted commented that's consistent with HealthEquity's accounting policies and approach. We think it's the right way to approach it. We think it gives our clients greater stability and certainly makes our financials much clearer. But it also has allowed us to focus immediately on optimizing those funds to generate some revenue and that's something that's really helped us out in the current quarter as well as some of our agreements with third parties.

I think looking forward, what we really look forward to is, first of all, beginning the process of migrating HSAs from the legacy custodial partners that WageWorks add to HealthEquity. And as Darcy mentioned, we've provided some information that helps in that regard. And then secondly, completing what have already been very fruitful discussions with different partners that help us really leverage our size and scale to increase for example, interchange revenue with our network partners. So we feel like folks are competing for our business and that's good and that will help us too. So that's where we are and that's where we're headed. And I think the net result of that is, as Ted said is, we're going to get to the point of achieving