Healthequity (HQY) risk factors, FY2025 10-K

Risks relating to our business and industry

1. 01Any diminution in, elimination of, or change in the availability of tax benefits for HSAs and other CDBs would materially adversely affect us
2. 02Failure to adequately place and safeguard HSA cash and Client-held funds, or the failure of any of our depository or insurance company partners, could materially and adversely affect our business, financial condition and results of operations
3. 03Failure to adequately manage the liquidity of the custodial assets held by our Depository Partners and insurance company partners could materially and adversely affect our business, financial condition, and results of operations
4. 04A decline in interest rates would reduce our income on our HSA Assets and Client-held funds and our ability to attract HSA contributions
5. 05A decline in the value of invested HSA Assets would adversely affect our results of operations
6. 06Integration of our acquisitions may not be successful, and we may not realize the synergies anticipated from our acquisitions
7. 07If we are not successful in adapting to our rapidly evolving industry, our growth may be limited, and our business may be adversely affected
8. 08Achieving our business strategy depends in large part on the success of our recent CEO transition
9. 09Any diminution in the use of HSAs or other CDBs would materially adversely affect us
10. 10The use or anticipated use of AI technologies, including generative AI, by us or third parties, may increase or create new operational and competitive risks
11. 11We may be unable to compete effectively against our current and future competitors
12. 12Developments in the rapidly changing healthcare industry could adversely affect our business
13. 13If our members do not continue to utilize our payment cards, our results of operations, business, and prospects would be materially adversely affected
14. 14Failure to maintain effective internal control over financial reporting could have a material adverse effect on our reputation, results of operations and financial condition
15. 15Cyber-attacks, including ransomware attacks, or other privacy or data security incidents could materially adversely impact our business
16. 16geopolitical events, including the war between Russia and Ukraine, have resulted in, and may continue to result in, an increase in cyber-attacks
17. 17Fraudulent activity, whether involving member accounts or our third-party service providers, has led, and could continue to lead, to financial and reputational damage to us and could reduce the use and acceptance of our products and services
18. 18by insurance, premiums and/or deductibles related to our insurance coverage may increase or the scope of our coverage may decrease, any of which could have an adverse impact on our financial results
19. 19We rely on software licensed from third parties that may be difficult to replace or that could cause errors or failures of our technology platforms that could lead to lost customers or harm to our reputation
20. 20Developing and implementing new and updated applications, features, and services for our technology platforms may be more difficult than expected, may take longer and cost more than expected, or may result in the platforms not operating as expected
21. 21Disruptions of service at our facilities, our servers, our third-party data centers, or our cloud service providers have interrupted and delayed our customers’ access to our products and services and will be harmful if repeated
22. 22Our technology platforms may link to or utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business

Legal and regulatory risks

1. 23The healthcare regulatory and political framework is uncertain and evolving, and we cannot predict the effect that further healthcare reform and other changes in government programs may have on our business, financial condition, or results of operations
2. 24Changes in applicable federal and state laws relating to HSAs and other CDBs could materially adversely affect our business
3. 25Legislative, regulatory, and legal developments involving taxes could adversely affect our results of operations and cash flows
4. 26tax rates, enactments of new tax laws, revisions of tax regulations, and claims or litigation with taxing authorities could result in substantially higher taxes
5. 27Regulatory changes and changes in the enforcement environment under the new U.S. administration may have an adverse result on our business
6. 28Changes in laws and regulations relating to interchange fees on payment card transactions could adversely affect our revenue and results of operations
7. 29Failure to comply with, or changes in, payment card industry, credit card association or other network rules or standards set by Visa or changes in card association and debit network fees or products or interchange rates, could materially adversely affect us
8. 30We are subject to complex regulation, and any compliance failures or regulatory action could adversely affect our business
9. 31Our subsidiary HealthEquity Trust Company is a non-depository trust company and subject to regulation and supervision by the Wyoming Division of Banking
10. 32If we are unable to meet or exceed the net worth test required by the IRS, we could be unable to maintain our non-bank custodian status

Risks relating to our service and culture

1. 33Any failure to offer high-quality member, Client and Network Partner support services could adversely affect our relationships with our members, Clients, and Network Partners and our operating results
2. 34We rely on our management team (including our new CEO) and team members and our business could be harmed if we are unable to retain qualified personnel
3. 35If we cannot maintain our corporate culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success

Risks relating to our partners and service providers

1. 36If our Network Partners choose to partner with other providers of, or otherwise reduce offering or cease to offer, our products and services, our business could be materially and adversely affected
2. 37A change in relationship with our bank identification number sponsor, or the failure by our sponsor to comply with certain banking regulations, could materially and adversely affect our business
3. 38Replacing our third-party service providers would be difficult and disruptive to our business
4. 39Our acquisition strategy may not be successful
5. 40Failure to manage future growth effectively could have a material adverse effect on our business, financial condition, and results of operations
6. 41We may not accurately estimate the impact on our business of developing, introducing, and updating new and existing products and services
7. 42We may need to record write-downs from future impairments of identified intangible assets and goodwill
8. 43Our substantial debt could limit our ability to fund operations, expose us to interest rate volatility, limit our ability to raise additional capital and have a material adverse effect on our ability to fulfill our obligations under our Credit Agreement and Indenture and to our Network Partners, Clients and members
9. 44The Indenture and the Credit Agreement contain covenants that impose significant operational and financial restrictions on us, and the failure to comply with these covenants would result in an event of default under these instruments
10. 45Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable
11. 46The exclusive forum provision in our amended and restated certificate of incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or team members