Healthequity Inc (HQY) 2019 Q4 法說會逐字稿

Welcome to HealthEquity's Fourth Quarter of Fiscal 2020 Earnings Conference Call.

Please note that this event is being recorded.

Please go ahead, Mr. Putnam.

Thank you, Olivia.

Good afternoon.

Welcome to HealthEquity's Fourth Quarter of Fiscal Year-end 2020 Earnings Conference Call.

My name is Richard Putnam.

I do investor relations here for HealthEquity.

Joining me today is Jon Kessler, President and CEO; Dr. Steve Neeleman, Vice Chairman and Founder of the company; Darcy Mott, the company's Executive Vice President and CFO; and Ted Bloomberg, our Chief Operating Officer.

Before I turn the call over to Jon, I have 3 important reminders to provide: First, a copy of today's press release posted earlier this afternoon is available for reference on our Investor Relations website at ir.healthequity.com.

Second, our comments and responses to your question reflect management's view as of today, March 16, 2020, only and will include forward-looking statements as defined by the SEC, which include predictions, expectations, estimates and other information that might be considered forward-looking.

There are many important factors relating to our business, which could affect the forward-looking statements made today.

These forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from statements made here today.

As a result, we caution you against placing undue reliance on these forward-looking statements, and we also encourage you to review the discussion of these factors and other risks that may affect our future results or market price of our stock detailed in the latest annual report on Form 10-K and subsequent Form 10-Qs or current 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.

And third, during this call, we will reference certain non-GAAP financial measures included in our press release, where you can find additional disclosures regarding these non-GAAP measures including reconciliation of these measures with comparable GAAP measures.

I'll now turn the call over to our CEO, Jon Kessler.

Thank you, Richard, and hello, everyone, and thank you for joining us on what we know is a busy and eventful day.

Today, we are announcing strong results for HealthEquity for fiscal year ended January 31, 2020.

And we're providing guidance for 2021, with a focus on the strategic, operational and financial impact on our business of the COVID-19 pandemic and of its economic fallout.

After briefly touching on the results, I'll offer comments on the strategic implications of the pandemic fallout.

Ted will provide an update on WageWorks integration and our operational response to the pandemic, and Darcy will lead us through details of the FY '20 results and our outlook for FY '21.

Today, we reported record operating results, market share gains and fulfillment of our promise to deliver a measure of immediate accretion from the WageWorks acquisition.

FY '20 revenues of $532 million are up 85% year-over-year and adjusted EBITDA of $196 million is also a record.

We previously announced FY '20 sales, including record organic HSA openings, our market-leading 5.3 million HSA members, $11.5 billion in HSA assets and 12.8 million total accounts, including both HSAs and complementary consumer-directed benefits, or CDB, participants at fiscal year-end.

Earlier this month, Devenir Research published its calendar 2019 HSA market assessment, quantifying HealthEquity's market share gains.

HealthEquity estimates that HSAs grew 13% market-wide, while HealthEquity grew HSAs 15%, and that excludes those reported by Devenir in 2018 for the acquired WageWorks and 35% overall.

Market-wide, Devenir estimates that HSA assets grew 23%, while HealthEquity assets grew 29% during [the evaluation] period.

And that, again, excludes those reported by Devenir in 2018 for the acquired WageWorks.

If you do include those, it would be 49% overall.

So that's a lot of numbers.

According to Devenir, team Purple delivered faster organic HSA account growth versus the market.

We delivered even more faster growth in HSA assets on an organic basis and even more added to its lead that we did with acquisitions.

At calendar year-end, HealthEquity had #1 market share of 19% by HSAs and was a close second by HSA assets at 16%.

We promised you a tenth straight year of market share gain.

Devenir has been doing this report for 10 years, and the team delivered that promise on an organic basis and then added significantly more with the WageWorks acquisition.

From that acquisition, we also promised first year EPS accretion on a non-GAAP adjusted basis.

And again, the team delivered.

Last June, just before announcing the definitive purchase agreement, we guided FY '20 non-GAAP adjusted EPS to between $1.35 and $1.42 per diluted share, using our current definition of non-GAAP adjusted EPS.

The acquisition was closed in August.

And today, as Darcy will describe, we are delivering FY '20 non-GAAP adjusted EPS of $1.73 per share, which is 22% to 28% first year accretion versus our immediate preacquisition expectation.

Darcy will discuss these results in a few minutes, including the obligatory reconciliation to GAAP measures.

We believe HealthEquity is positioned for a vigorous response to the COVID-19 pandemic and its fallout on our industry.

I'd like to start with yields on custodial cash.

In Q4, 23% of our revenue came from yield on custodial cash.

That was down from 48% in our Q2, including cash in HSAs and CDB client-held funds.

Devenir reported that industry-wide, the comparable figure is 53% of revenue in calendar year 2019 was attributable to net interest margin.

So we've become far more diverse, and the main reason for this difference is our one partner total solution approach to HSAs and complementary consumer-directed benefits.

The FY '21 guidance we provide today assumes the Federal Reserve Bank, which returned its benchmark rates to post-2008 crisis conditions yesterday, maintains them there.

The relatively modest implied impact of roughly 4% reduction in revenue from the midpoint of our prior guidance reflects the duration of fixed rate deposit agreements in our custodial cash program.

As we've said many times, the program prioritizes relative stability over maximum return, and from our perspective, that prioritization is now paying off.

Reduction in interest expense on HealthEquity's outstanding indebtedness significantly offset lower custodial revenue, as Darcy will discuss.

What happens over time, though, if these conditions persist?

For HealthEquity, data from well over a decade of custodial operation provide a sense of how yields on our custodial cash program change with interest rates banks offer typical customers on time deposits.

HealthEquity has typically earned on HSA cash, a 75 to more than 125 basis point premium to average 3- to 5-year jumbo CDs, 3 to 5 years being the target duration for HSA cash under our custodial policy.

This premium exists not by accident, but because our depository partnerships are not average.

HealthEquity provides high visibility to future deposits and flexibility on duration needs and carries all of the noninterest expense of attracting, retaining and managing HSA members.

While our depository partners are those that are best able to make use of that visibility and flexibility from among well-capitalized, federally insured institutions.

In fact, the company's lowest custodial cash yield for any fiscal year, 1.52%, occurred during FY '15.

National average jumbo CD rates were at or near their crisis year of lows during FY '15, with 3-year CDs averaging 0.51% and 5-year CDs averaging 0.80%.

By contrast, HealthEquity yields on HSA cash have not maintained a consistent relationship to the gyrations of treasury yields over our history.

Of course, the future doesn't always look like the past, but HealthEquity's experience during the last crisis as well as its lower exposure to rates versus competitors and versus its history should serve us well.

Today's guidance reflects a commitment -- also reflects a commitment to continue the integration process discussed over the last 2 quarters, and to do so at full speed.

We expect more growth opportunities as competitors with variable rate exposure with incomplete solutions or with outsourced platforms or insufficient scale, find it more difficult to compete under these conditions.

We expect greater attention to the proven cost savings to both employers and consumers from HSAs and complementary CDBs.

Some portions of our solutions such as COBRA and Commuter administration may see either increased or decreased utilization in the short term.

But in any event, we see this as an opportunity for long-term growth.

Ted is going to walk through where we are in integration, along with our efforts to deliver Purple to our members, clients, partners and to each other during the pandemic.

Ted?

Thank you, Jon.

Before discussing the progress on integration, I want to thank those responsible.

Team Purple has been nothing short of extraordinary, providing remarkable service to our members, clients and partners while embracing our integration goals all in very challenging times.

Q4 is, of course, our busy season, and this was the most successful one in recent memory.

We couldn't be more pleased with how our team members wrapped their arms around our partners, clients and members by meeting all critical service levels.

We are especially delighted to report that we met or exceeded service levels on the legacy WageWorks platforms that had not been achieved in years, all while delivering customer satisfaction scores significantly higher than last year.

These successes were made possible in large part by the service case project, I discussed last earnings call and the incredible commitment that our team members have demonstrated.

We can't wait to see what the team is capable of as we make service delivery even more efficient and effective going forward.

The WageWorks integration remains on track.

As of fiscal year-end, we have achieved approximately $30 million of permanent run rate, cost and revenue synergies up from $15 million at the end of Q3 and we are on track to meet our $50 million commitment this fiscal year, 1 year ahead of schedule.

Our investments to deliver a total solution on a unified platform also remain on track.

As of fiscal '20 year-end, we had spent $32 million on these investments with another planned $60 million in FY '21.

We will sunset 5 legacy platforms this fiscal year, one of which is already complete.

We consider a platform to be sunset when there are no members actively served on the platform and all runout services for members have been completed.

Just this week, we will deploy the first phase of our unified experience as our first HSA asset migrations are completed.

We are on track to complete the onshoring of round-the-clock member service in Q2 of this year.

We appreciate the understanding and patience the bulk of our clients, partners and members are showing as we make these changes.

They understand that they are getting an upgrade as well as a step closer to the total solution they want.

I won't repeat a lot of what Bill said last month about our sales, marketing and relationship management teams, but let me simply reiterate that our pipeline is strong, our cross-sell efforts are delivering real impact and we have been able to use the integration as an opportunity to reactivate and strengthen distribution relationships.

Of course, every client, partner and prospect is prioritizing their response to the COVID-19 pandemic.

That will likely slow some decisions.

The economic fallout may, as Jon suggested, ultimately create new opportunities or accelerate existing ones.

The team is committed to deliver on its integration, service and sales goals even as we join many others in good citizenship to slow the spread of COVID-19.

Per our business continuity plan, HealthEquity has transitioned to a work-from-home posture, with offices open for critical physical functions such as mail processing only.

Team members are equipped to work at home for an extended period.

We are monitoring critical service partners as they implement their business continuity plans.

We have also taken steps to provide greater financial security to team members, extending paid time-off for those who may need it, paying for broadband and other work-at-home costs and expanding our Helping Hands Program for anyone in extraordinary need.

We have asked members, clients and partners for patience; but more importantly, for feedback on where we can improve as we all adjust to these circumstances.

In closing, we are confident the measures and progress I just described will help us achieve additional synergies and improvements to enhance our Purple service and drive margin increases.

And we are working hard to realize them in this fiscal year to help offset the revenue decline that Jon discussed.

However, our first priority is to maintain our service levels and be where our clients and partners need us to be.

I will now turn the call over to Darcy to review the financials and new guidance.

Thank you, Ted.

I will review our fourth quarter GAAP and non-GAAP financial results.

A reconciliation of our GAAP measures to the non-GAAP measures is found in today's press release.

Our fiscal fourth quarter financial results include the operations of WageWorks, which was acquired on August 30.

The WageWorks acquisition diversifies our revenue growth opportunity, reducing the overall impact of interest rates and rate variability on total revenue.

In Q4, revenue grew overall and organically in each of our 3 categories.

Service revenue grew to $122.2 million, rising from 30% of revenue in the pre-WageWorks second quarter to 61% in the fourth quarter.

This is primarily attributable to the increase in CDBs to 7.5 million, along with the 5.3 million HSAs that we now administer, including those that came from the acquisition of WageWorks.

Custodial revenue of $49.4 million in the fourth quarter increased 39% year-over-year, attributable to growth in HSA assets and a higher year-over-year annualized interest rate yield of 2.41% on HSA assets custodied by HealthEquity during the quarter.

Custodial share of total revenue declined to 25% from 50% in Q2.

As Jon mentioned, 23% was attributable to custodial cash assets.

Going forward, we have multiple paths to grow custodial revenue, continuing to grow balances, transitioning all accounts to a HealthEquity custody, a process, which as Ted mentioned, is already underway, and growing revenues from client-held funds.

The HSA asset table of today's press release includes additional details to help you assess these opportunities.

Interchange revenue grew 104% in the fourth quarter to $29.7 million, driven by the increase in average total accounts.

Our large base of total accounts offers multiple opportunities to grow interchange revenue going forward, including more favorable interchange shares with partners.

Gross profit grew to $113.7 million compared to $44.4 million in the prior year.

Gross margin was 57%, including the change in revenue mix resulting from the WageWorks acquisition.

Operating expenses were $99.1 million or 49% of revenue, including amortization of acquired intangible assets and merger integration expenses, which together represented 15% of revenue.

Income from operations was $14.5 million.

We had a net loss for the fourth quarter of $200,000 or breakeven on a GAAP EPS basis.

Our non-GAAP net income was $28 million compared to $19 million, a 47% increase.

Non-GAAP net income per share grew to $0.39 compared to $0.30 per share last year.

Adjusted EBITDA for this quarter increased 125% to $61.3 million, and adjusted EBITDA margin was 30%.

For the full fiscal year, revenue was $532 million, resulting in gross profit of $325.9 million or a gross profit margin of 61%.

Income from operations was $77 million, and adjusted EBITDA was $196.5 million.

Turning to the balance sheet.

As of January 31, 2020, we had $192 million of cash and cash equivalents, with $1.22 billion of Term A debt outstanding and no outstanding amounts drawn on our line of credit.

Turning to guidance for fiscal year 2021.

Based on where we ended fiscal 2020 and the economic environment now expected for fiscal year 2021, we expect HealthEquity will generate revenue for fiscal 2021 in a range between $770 million and $790 million.

We expect our non-GAAP net income to be between $124 million and $132 million, resulting in non-GAAP diluted net income per share between $1.70 and $1.81 per share.

We expect HealthEquity's adjusted EBITDA to be between $245 million and $255 million for fiscal 2021.

Relative to our initial revenue guidance of $812 million to $820 million, today's guidance incorporates a reduction of approximately $30 million to $40 million in expected revenues in FY '21, which is due to the deterioration of interest rate conditions and other uncertainties.

We have replaced the depository contracts that expired last year, and have placed new deposits for this year in fixed rate depository agreements.

We do have a modest percentage of funds exposed to variable rates, and current conditions leave us cautious with respect to yields on cash placements we will make throughout the year in connection with the transition of legacy WageWorks HSA assets to the HealthEquity platform.

Under present conditions, we expect the average yield on HealthEquity custodied HSA cash overall to decline in FY '21 compared to our prior guidance.

Given the current rate environment, we now expect the yield on the HSA cash assets on the HealthEquity platform to be approximately 2.2% during FY '21.

This reduction from our prior guide of 2.4% accounts for approximately $15 million of the revenue reduction.

An additional $15 million reduction is the result of lower yield on client-held funds, lower revenue anticipated from WageWorks HSA cash and lower HSA invested balances due to declines in asset value.

However, the lower rate environment is also expected to reduce the amount of interest that we will pay on our outstanding debt.

As was discussed in previous earnings calls, our variable rate debt is a natural hedge to rates on cash -- custodial cash assets.

Assuming rates remain at current levels, we expect to pay approximately $20 million less in debt interest in FY '21 versus our prior assumptions.

Today's guidance includes the effect of approximately $30 million of achieved run rate synergies, Ted discussed, which will be fully realized in FY '21.

Our non-GAAP diluted net income per share estimate is based on an estimated diluted weighted average shares outstanding of approximately 73 million shares for the year.

The outlook for fiscal 2021 assumes a projected statutory income tax rate of approximately 25%.

In connection with the assumed statutory tax rate, you will note that at the request of a number of our sell-side analysts that cover HealthEquity, and in an effort to simplify modeling of our projected tax rate, we have revised the method for reconciling net income to non-GAAP net income and GAAP net income per share to non-GAAP net income per share.

We have provided 2 reconciling tables in the press release.

The first showing a reconciliation under the methods that we have used throughout this year, and a second table that provides a reconciliation under the new prospective method.

As Ted mentioned, we continue to focus on margins and the realization of synergies from our combined operations.

We are off to a good start for achieving the outlined synergies that Ted discussed earlier.

Some of these synergies will be additive to both the top and bottom line for fiscal 2021 and beyond.

As we have done in recent reporting periods, our full year guidance includes a detailed 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.

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 not excluded.

With that, I'll turn the call back to Jon for some closing remarks.

Thanks, Darcy.

So I get a whole minute or 2 to be human here.

I think our investors and public market participants generally might wonder how ready the team at every one of their portfolio companies is to meet the challenges that we all are facing now and, certainly, the opportunities that we have here at HealthEquity.

And I stumbled on one data point that might be useful.

Last -- one evening last week, as many of our team members were assembling their workstations and work-from-home setups and taking their test calls, one of our permanent work-at-home member services specialist sent something out over our internal IM and I wanted to read it here.

It says, "Dear office refugees, us homies just want you to know that we are 100% here for you.

We sort of specialize in 'all,'" and then she put the all in sarcastic quotation marks, "that comes with being remote.

So if you're feeling the need, hop on over to homie chat, any time of day or night.

You'll find remote experienced peers, who are level experts and excited for the chance to help make things good as gravy." And then she signs it, "hashtag, one partner." This little message went, if you'll pardon the terrible pun, viral with -- inside HealthEquity under the subject line -- under the following subject line, which I think says it all, "With teammates like this, we can't fail."

And with that, let's open the call up to questions.

Or maybe we won't open it up to questions only if the operator comes back.

(Operator Instructions) And our first question coming from the line of Anne Samuel with JPMorgan.

Despite the lower revenue guidance, your EPS guidance is still really good for the year.

And I was hoping maybe you could talk about where some of the incremental savings are coming from and maybe what you're seeing in terms of shift from the synergies, maybe out of revenue into expenses.

Sure.

Darcy, you want to begin speaking to that and we can -- Ted or I can add?

Sure.

So in the environment, we've kind of gone through everything within our operating plan, and we've tried to be understanding, as we said, that the revenue impact is approximately 4% of our total revenue as it was before.

And not that it doesn't have an impact, but we have also taken a look at all of the things where we can actually make a difference.

We don't control what the interest rate environment does, but we can respond to it.

And so collectively, as an organization, we've gone through every one of our anticipated efficiencies and synergies that we previously -- we had been working on, so we already had a method in place to evaluate that.

And we've taken a really good, hard look at that, and we think that we've made a commitment about how we could achieve some of that because we are very committed to looking at not only our top line but also our bottom line.

And with that, maybe, Ted or Jon can add some specifics about how we thought about this.

But we do believe that overall, throughout the entire organization that there are efficiencies to be derived.

Yes.

Ted, anything to say, and then I'll finish up?

Sure.

Just that I would support Darcy's perspective.

We have been planning efficiency management, cost management since the day we announced this acquisition.

And so the good news is that we've been thinking about it really hard.

And that allowed us to be ready when we needed to get as aggressive as possible within reason and balance being -- managing costs as efficiently as possible, continuing to provide Purple service.

Our team has done an unbelievable job managing these integrations while finding efficiencies and delivering on those.

And so I don't think that there's any special sauce other than being ready and having had thought about it.

It wasn't like the first time we thought about expense management was when the Fed cut rates the first time, we've been thinking about it for quite some time.

Anne -- and Anne, I think the last part of your question was about -- really about the mix between revenue and expense within our synergy number.

As you know, we're anxious for the point where we can stop talking about synergies and just talk about increasing efficiency.

Nonetheless, since it's the way things are, we laid out a $50 million synergy target originally to be achieved at the end of FY '22, accelerated that to the end of FY '21.

And as you will recall, about $27 million of that was revenue and $23 million was expense.

We are sticking with that $50 million number, some of that revenue component probably comes down, but we will make it up on the expense side.

And much of that revenue will be just fine.

As Ted said earlier, we're much happier getting paid for something than -- that we're doing ourselves than paying a third-party to do it for us.

So there is some real savings there on the revenue side that will hang on just fine.

So there will be some modest shift in that number, but it won't be terribly large.

That's very helpful.

And then maybe just a follow-up.

You talked about some of the moving pieces of the yield that's driving some stability there.

But assuming interest rates hold, is there a rule of thumb that we can think about in terms of what the out years would look like or the impact of how the current change in yields would flow through?

Yes, I tried to give some guidance on this topic in my opening remarks, and let me unpack it a little bit here.

And again, recognizing, obviously, we're not providing out year guidance and all that kind of thing.

But if you look at -- we do have the luxury of having been specifically in our business in custodial operation for, I don't know, 15 years now.

And if you look at the data over our history, a couple of things become very clear.

One, which I mentioned earlier, which is our yields do not -- by design, do not follow the gyrations of global fixed income markets, which are influenced by all kinds of things, positively or negatively around global trade, currency, et cetera.

And we never design the program to do that, and it doesn't.

What they are highly correlated to, as you might expect, is the interest rates that banks pay on comparable duration, large -- which you can [just catch] $250,000, but nonetheless, what I refer to is jumbo CDs.

And if you look out over time, what's tended to happen is that we have generated a premium to those of, as I said in the remarks, between 75 and 125 basis points.

If you look at the underlying behavior of the rates, which I think is key to answering your question, right, obviously, there's a correlation.

These rates will drift down relative to where they were a month ago or are today, but they will likely drift down somewhat slowly because -- well, they always do because, in part, that is the rates that banks are charging and because there are a lot of factors at play and banks continue to need money and so forth.

And so I guess our basic view is that a couple of useful guide points are what -- as we said in the discussion, where rates have been, where rates have been at the bottom of the last crisis.

And in general, where our premium has been to what banks are paying their more typical customers.

And there's nothing we've seen in the past few weeks or frankly, past few days, that would lead us to a different conclusion than that.

Our next question coming from the line of Greg Peters from Raymond James.

In your comments, you said $20 million of lower debt expense.

I'm assuming that's in your EPS guidance.

Can you talk about your free cash flow for this year?

And remember, Jon, you've previously said or suggested that you were going to use free cash flow to pay down debt.

So can you give us an update on the debt situation, please?

Yes.

Darcy, you want to take this one?

I'll chime in.

Sure.

Yes.

So we expect to generate cash from operations.

We have a few expenditures that we haven't had in the past.

One is being interest expense, which has been incorporated into our modeling.

And additionally, we -- as we're making the transition of HSA assets from both the Mellon platform and the Webster platform, there will be some cash payments made to facilitate that going on, and those have been incorporated into our cash flow.

But we feel pretty good about our cash levels that we will maintain throughout the year.

And we will evaluate, as our cash balances grow about paying off debt earlier in light of the current environment.

We are -- the interest benefit that we get from lower interest rates on the debt is -- helps cash flow by that $20 million.

And so we're very pleased with that also.

Yes.

I mean just to be clear there, Greg, I think part of the gist of your question was, is the $20 million rate-driven or is it based on repayment?

The answer is it's entirely rate-driven.

At some level, it was -- I guess I'd call it a happy accident.

Darcy might call it brilliant planning.

But there's a bit of a natural correlation there or hedge between our variable rate exposure on the cash that we manage and the borrowings of our own corporate money.

So it's not an accident that -- again, looking at it from an EPS perspective or certainly a free cash flow perspective, that, that $20 million significantly offsets the $30 million that Darcy talked about on the other side of this.

As to your question about repayment and, generally, the situation of our debt, we've gone through and modeled out not only this year, but our thoughts with regard to the subsequent years.

And at this point, what we expect is that the absent -- let me put it this way, as Darcy said a moment ago, absent and early repayment, our cash position at the end of the year would be more or less the same place it is now, perhaps a little better and that it would grow in subsequent years.

So we don't really see a circumstance where -- well, I guess I'd put it this way, so that does raise the question, since we do have excess cash of whether we should take this option to repay debt.

It would be a little bit of a contrary move to what we see other people doing right now, obviously.

But it's something we'll talk with our Board about and we'll think about, and if it makes sense, we'll do it.

But whether we do so or not, I think the bottom line you should take from this is that there is -- that we feel pretty good about where we are from the perspective of our debt.

Yes, I would add one other piece to that, that would probably be a later question anyway, so I may as well answer it right now.

In the current rate environment, we do believe that there will be opportunities for additional portfolio acquisitions.

As rates generally go down, then those portfolios become a little bit more attractive in the marketplace.

And so we want to still maintain the flexibility to be able to purchase those portfolios as they become available.

That was great.

You nailed a couple of answers with my question.

So my...

It was a 4-part answer instead of a 4-part question is what you're saying.

Yes.

I want more of those, please.

So my second question or my follow-up, I should say, so I'm curious about how the C-19 virus has affected call center volume in the last couple of weeks.

And I'm also curious about how you think it might affect the RFP and sales process this year as we think about results for year-end fiscal '21.

Hey, Ted, why don't you take this one?

Sure.

So I will endeavor to give you a multipart answer to that question.

First, let me start with the member services organization.

First off, just a huge thank you to our -- both our member services leadership and our IT leadership.

We have well over 80% of our team members working from home today.

Today being the first day of the work-from-home experience, which is just with no degradation in service.

We met service levels on all critical platforms, give or take, in a day, which is -- which was great to see in that first day.

We haven't seen an appreciable volume spike, maybe a little bit in the COBRA arena, but I don't think anything quite yet COVID-related, although we'll certainly keep an eye on that and report back.

But our most important concern operationally was just making sure we could continue to answer all the phone calls we get every day.

Both ourselves and our outsourced partners and everyone has answered the bell, thus far.

Today was a great service day in that regard.

As it pertains to the RFP and sales process, we've been, as you would expect, monitoring this very closely.

We keep tracking sales force kind of down to the meeting.

Did the meeting get rescheduled?

Did the meeting get postponed?

Did the meeting get canceled?

Did the meeting go from face-to-face to virtual?

And by far, the -- most of the sales meetings that we have scheduled are not getting postponed or canceled.

They're getting rescheduled to virtual.

And so we consider that to be a positive sign.

That doesn't mean we expect that no one will delay these meetings or delay their decisions.

I think everyone's trying to grapple with how COVID impacts them.

But thus far, the vast majority of any changes that Bill and his sales team have seen have just been to go from -- gone face-to-face to virtual, which is what we'd hope to see.

Our next question coming from the line of Jamie Stockton with Wells Fargo.

I guess maybe the first one, just -- I think, Darcy, you kind of held out 2 buckets of headwind for revenue, one from yield on the cash that you're custodying and the other $15 million on client-held funds.

Is that second bucket hitting the services line from a revenue standpoint instead of custodial?

No.

So the -- what I would characterize as the second bucket -- the first one being kind of the legacy HealthEquity cash yields.

The second one is kind of variable rates for both client-held funds and the understanding that as we place new money from the transition, from the Wage, cash as it comes in is that those will be just at lower rates than what we previously anticipated.

But we -- what we did do -- and we anticipated this, we've been in contact with several of our depositories over the past few weeks.

We've been in contact with our banking partners, et cetera.

And we expected that the rate action would ultimately be taken, whether they took it yesterday or whether they were going to take it on the 18th.

It's what we expected to happen.

And so as we've talked to people about what we expect those rates to be, that's what we've included into our forecast for yields and for custodial revenues.

So we anticipated taking the -- the Fed rate would go to a zero bound, which has an impact on the LIBOR rates that have some variability in our contracts.

And so those we anticipated going to the zero bound and that they would remain there for the remainder of this year.

And so we've incorporated that into the model.

Okay.

And then maybe economic environment looks pretty choppy.

Can you just talk about the trade-off here of potentially higher unemployment as a headwind for the number of active accounts?

And maybe an increase in demand for COBRA services, how do you think about that?

Yes.

I think that first sentence was probably the understatement of the week.

It does look a little choppy.

Look, I -- this is -- we're fortunate, I guess, in this regard, and that we have the benefit not only of the experience of HealthEquity, but also can reach back into the experience of WageWorks all the way back to its founding in 2000.

And here's what we take from that.

In general, the business -- first, one point, in general, the business is less cyclical than people think in both directions, and I think we've seen that certainly on the upside in recent years.

But importantly, also, in the other direction, that is to say, I think it's pretty steady.

There are some things that do happen in down environments that are helpful to the business.

And it's kind of funny because the original investment that was made in WageWorks was made roughly the day of the market peak in March of 2000.

And so you can imagine that the investors were asking, do you regret this, et cetera, over the next couple of weeks and months.

And their answer was, no, we think this is going to be something that's a survivor and a fighter in this environment and it was.

And the reason for that is as follows: First, actually something you didn't mention, which is, in general, in these environments, people are more concerned about the cents and the dollars.

And we offer solutions that help employers and employees save money.

And at some level, it's that simple.

And that's something that -- that message resonates in this kind of environment.

Second, as you mentioned -- as you did mention, there is the element of COBRA where you will see increased activity in all likelihood over the course of the coming months.

And we get some benefit from that because COBRA is priced in part based on the actual activity, that is acceptance of COBRA.

And as I mentioned in an earlier call, this also kind of really -- what's happened has really gotten us to think hard about everything that we can do for our members who are in that situation, so that we can really serve them well, whether it's by offering COBRA or by directing them to other alternatives.

So I think -- the short answer is that I think the business is mildly countercyclical.

I don't want to overstate that.

But I think, in general, there is that element to it.

The thing that really does offset that, I think, more so than the lack of employment, therefore, lack of accounts, is just the rate discussion we've been having.

The fact that you don't get, obviously, market increases that can help you out, and one sort of a factor that I don't know how it will turn out in this instance.

In the 2008 period, there was a fairly dramatic increase in saving behavior, and that was helpful to the business.

Whether we will see a similar increase in this -- this time around, I don't know.

Obviously, the crisis is much more related to something health than a financial thing and all that, so who knows.

But that's another variable that's out there.

So that's again, a long way of saying -- sorry for the long answer, but that -- we think that there's a mild counter-cyclicality to the business that I don't want to overstate, but it's definitely there.

Our next question coming from the line of Robert Jones with Goldman Sachs.

I guess maybe just to pick up there around just the economic pullback and thinking if there's risk or precedence, you started touching on this a little bit.

Just to the cash levels that are kept in HSAs, any historical reference on those being drawn down more rapidly than a typical period?

And then I guess just thinking about new HSAs, any precedent from more challenging economic periods about just levels of money and savings that people are willing to put into HSAs that you would reference?

Yes.

I mean -- I guess I would.

It's hard because you don't have the counterfactual, right, but all you have is the data.

But in the aftermath of the 2008 crisis, and certainly as it kind of seeped in that this was going to be around a while, what you saw more generally in the economy, obviously, was increased savings rates and that translated into what were perceived to be increased deposit rates into the HSAs.

It's interesting that the drawdowns really do not appear to have much, if any, correlation to broader economic activity.

I mean with the important exception that obviously, when people leave their job, if they are not on an HSA qualified plan, many will draw those funds down, that kind of thing.

But in general, the behavior you might expect, and I think this is echoed in other areas of retirement, which would be to see massive drawdowns at this point.

I think people are willing to take a pause on that and instead try to manage their expenses elsewhere rather than to drawdown funds that are there for their health care or what have you.

But that's been our experience.

Obviously, as I say, we don't have the counterfactual, so it's not perfect.

But in general, we don't see that one as a material risk in the short or medium term.

No, that's fair.

And then I guess maybe just a follow-up on the commuter benefit.

I know it's not a huge piece of the overall pie, but is there any risk around just reimbursement if, in fact, many employees are, in fact, not commuting?

And then thinking forward, is there any precedent or risk that you've seen for folks maybe not utilizing the commuter benefit as much given an economic pullback like we're seeing?

Yes, we have thought about this one.

And there is some, and that's a little bit reflected in the caution of our guidance that is there are some upsides maybe around COBRA.

This could be a downside.

I think the issues that we're concerned with here are the more practical ones and serving our customers well.

So we mail out a lot of transit passes every month as well as load cards and so forth.

And it's fair to say that, I think, for the month of April and into May, transit agencies around the country are evaluating what their posture is going to be about people who want refunds for their monthly passes or that kind of thing.

And it's our job, as the most connected entity to those agencies, to be able to explain those policies where people ask us, get them to the right place, if we need to get them somewhere else and to make that happen.

So I -- at some level, some of those answers boil down to what the public agencies that are, for the most part, on the transit side are willing to do.

But I expect that they'll figure it out and we'll be there to -- from our perspective, to make sure that our members get to the right place.

But I think it's fair to say that in the short term, there's something there.

Do I think that people coming into Manhattan are permanently going to stop taking transit?

I doubt it.

It's possible.

If they do, they may have to park, and I'm not sure where they're going to park, but they would be using our benefit there, too.

So I feel like in the long term, this is an excellent benefit, and it will be fine.

But yes, it's certainly possible, there will be some short-term blip there.

Our next question coming from the line of George Hill with Deutsche Bank.

Yes.

I'll say, first, I'm still trying to wrap my head around the -- it's a little bit choppy economically out there.

I'll give Jamie a hard time about that later.

I guess just...

Wells is a lot less fee-dependent, there is more fees use than other banks, as we all read this morning in the Wall Street Journal.

So that's sitting pretty.

What's going on?

Well, I...

I got you on that one, right?

Different down there in Memphis.

I am not going through that one.

But Jon, you said something to the effect of this weekend wasn't the first time that you guys thought about the interest rate environment when you saw the Fed's comments.

And I guess my question is, it's more of an anecdotal question, like what can you do as you start thinking about what are going to be dramatic changes in the rate environment?

I guess when do you start to put the plans into place?

And I guess like the quantitative question I would ask is, could you talk about what the duration of your rate contracts are right now?

And kind of how should we think about the timing and the visibility that you guys have?

Like you've talked about spread, you've talked about thinking [in the] jumbo CD rates, so kind of like, can you talk a little bit about the laddering of the rates contracts and stuff like that?

And just how to -- like how do we think about the visibility there?

Yes.

So our rate contracts are laddered to a maximum of 5 years with a target average duration of between 3 and 5. And as we've said in the past, we tend to be, in terms of average duration, closer to the 3 than the 5, but with the longest durations at this point in the year because we have -- we'll have just struck these in the last few months for new cash and the like.

So that kind of gives you a feel for how this sort of spools out over time, consistent with Darcy's comments.

I think to your earlier question, we -- first of all, let me say, this is something we always want to have some level of contingency for recognizing that our actual job is to run the business as efficiently as possible recognizing that there are factors we don't control.

And so we should try and run the business in such a way that we don't try and run around adapting to them when we -- when it doesn't make sense.

So we actually, in this regard, in -- I want to say, as we got into late -- certainly into mid- to late-February, oddly enough around the time of our initial guidance on the revenue side, this was definitely something we began thinking about.

We admittedly, I think -- we're not economic forecasters, as you know, George, but we, I think, internally had the view that it was possible that this would be worse than it appeared to be just looking at what the pictures were showing about economic activity in other countries that had been affected and the tendency of our federal reserve and so forth to jump in and try and save the day.

So we've been thinking about that over the last number of weeks.

And as Ted said -- kind of said, "Okay.

What does that imply about the" -- for lack of a better term, "the IRR on any investment we're making?" And if the answer is that it made a change, then we made a change.

And I think that's how you'd want us to handle it rather than imagining, "Oh, you know, there's some cost thing we would have gotten otherwise that we're not getting now." So -- or the other way around, "There are some cost savings we were just sort of hanging around with." And so the effect of that is fairly modest.

I mean, obviously, most of what we're saying is, is there's going to be a rate reduction and that will affect the top line, and it'll have a little more modest effect in the bottom line but most of it does flow through.

I guess I'd say one other thing which we haven't said, thus far, and that is, one thing that isn't clear is how quickly others in our industry and so forth will respond to this in terms of the rates they pay our -- the members.

We -- as I think you know, George, we define how we approach that issue in our custodial agreement with members.

It is a formula.

It's based on what's going on in the competitive market, so that we don't employ any discretion in that area, but it will affect the end result.

We have conservatively, I think, assumed for these purposes that there is no change in what we pay our members and so forth.

Whether that turns out to be the actual outcome is debatable, but that seemed like an appropriate conservative assumption since we have no control over it.

No, that's super helpful, I guess, and if I can have a quick follow-up.

As we think about the competitive environment and the sales environment, I guess, how long -- it sounds like you're not seeing necessarily an impact on selling, but one would think the churn is probably going to go down.

I guess how do you think about how long this kind of crisis drags on?

Like when do you think it needs to start to show signs of improvement for you guys to continue to have the ability to take market share?

I guess I can join the thousands of other corporate executives who've said, "I'm not an epidemiologist," because I'm not.

Sorry, I was just trying to add a little levity there, but -- as I usually do.

But I think what -- the answer to that question in both directions -- and I want to be clear that I think what Ted was trying to say is, of course, there will be some impact on sales.

That will be true for every company.

Just people will kind of be frozen in place to some extent.

But we have been heartened by the fact that HR is one of those functions that can work virtually and how quickly our customers and prospects have transitioned to working in a virtual environment and focused our energy on both for our sales teams and to your point about churn, our account executive teams and our client service teams getting -- those are the first people we wanted to get trained up on exactly how they would conduct themselves in a remote context.

I mean not just trained up on how the software works, but how to look your most professional in that environment.

And I mean I was in a finalist meeting at the end of last week, while I was trying to rescue college refugees from Boston and -- who -- they're so broken up about their school being canceled, by the way.

It's just -- they're just crying, it's terrible.

But that's also sarcastic as I'm sure anyone with college-ed kids knows.

But in any event, was -- at some level, it's a different version of how you use your time and how you present your best.

But it may be the case that sales executives can be just as or more efficient in this environment than they are in the normal way of selling.

It's just different.

And those who adapt to it well, will do well.

And we're going to try and adapt to it well.

Our next question coming from the line of Donald Hooker with KeyBanc.

I think a conference call or 2 ago, you had referenced that there might be some intentional churn in your business, i.e.

you might consider walking away from some unprofitable contracts with WageWorks for a couple of quarters in.

As you've gone, have you pruned off anything in your -- when you think about your revenue guidance?

That's what I was wondering in your revenue guide.

And does there -- is there any kind of pruning of some unprofitable businesses as well?

Or what can you say about that?

Nothing's changed in that regard from our prior revenue guide.

I mean -- I think, actually, Ted can provide some good color on how we've approached this in different situations because we have identified cases where we have unprofitable business, and we're trying to do something about that.

So Ted, you want to speak to some of that a little bit?

Sure.

I think that the headline is it is not yet a material revenue number where we are having these types of conversations.

But nonetheless, we are having them, and they are -- basically, what we're doing is kind of a full-throttle contract review where, as contracts come up, we are taking the opportunity to ensure they're fair for both sides.

And what we're finding is that where perhaps legacy Wage bit off more than they could chew is really around providing certain services and certain customizations, which were probably unnecessary and, in any event, unprofitable.

And we're just having candid dialogues, both with partners and with actual employers about whether or not we can continue to do those things.

And if so, if they really need them, would they be amenable to a price increase to support them.

And those conversations, while modest in number, are going reasonably well because we're just being kind of candid and forthright about how we see the world and the fact that we want to stay partners with folks, but that we won't be able to do it under the terms of the agreement.

And we've achieved some successes in renegotiating some of those deals.

But I mean we're not talking a material revenue move relative to the size of the overall business.

It's just kind of -- it's really more good hygiene, and we have to continue to do it.

I mean I will say, Don, I think part of maybe where your question is going is to understand year-over-year growth, that kind of thing.

We did both in acquiring the company, in our initial guidance after we acquired it, and then certainly in our most recent guidance, we did assume some level of incremental attrition in the current year whether as a result of pruning or of just stuff happens.

For the moment, let's put that aside, and we've, I think, done pretty well, thus far, as we reported with the sales numbers, but that is a part of our thinking.

And maybe one follow-up on the renewal cycles.

In your guidance, how much is sort of -- I think in your last call, you were happy with some renewals that you had achieved.

It sounds like these are like an ebb and flow -- I assume ebb and flow year-to-year renewals.

I don't know if one year is tougher than another.

It's like last year, you had a bunch of them intuiting here.

Is there anything to think about in this upcoming year that you're watching in terms of renewal cycle?

Yes, I'll give a partial answer and then, Ted, if you'd like to add to it, or Steve.

Steve participates in these, too, and he's available with us.

We were happy because we had a lot of -- what's the word, guinea pigs going through that python or whatever it is last year of renewals.

And we were very happy about the result of the renewal process.

We didn't win them all, but particularly as the year went on, we won a lot of them.

And we felt real good about that.

So I think if the merry-go-round goes round again, it's probably the case this year to an earlier question that there will be a little less work done on this, and that will help us on the renewal side, and we'll certainly try to have it help us on the renewal side.

But Ted, anything to really add to that?

Yes, I would just make 2 points.

The first one is it's a little early in the cycle, but we are monitoring very closely all of the RFPs that come in, both from prospects and also from existing clients.

And I think thus far, the ratio is reasonably favorable, but it's early.

And second, we understand that the bigger we get, the more territory we have to defend.

And out of every 100 RFPs in the industry, last year, maybe 17 of them were our clients.

And this year, 19 would be or whatever the market share would dictate, and so we're allocating more resources to our enterprise clients precisely for that reason.

We've doubled the size of our account executive team year-over-year to make sure that we build deep and mutually beneficial relationships with these clients to try to head RFPs off at the pass or at least be ready to respond to them.

But it is something that we watch very carefully and thus -- it's a little early to tell, but thus far, we feel like we're on top of it, meaning there's no surprise RFPs or we found out after the client was gone that they took -- went to RFP.

We feel like we have a pretty good handle on where we sit.

And so far, so good, but it's early.

One other point here is, every -- especially as we get really accustomed to, and as everyone understands, the total solution we have to offer, I mean, at some level, almost every RFP is an opportunity for business expansion.

And we talked about -- Bill talked about in February's call some of what's going on there.

And so if you are, let's say, a commuter and FSA client now, the farther we get down the road of total solution, 1 team, 1 company, 1 partner, 1 platform, the easier it is for us to offer you incremental services that -- and to light those up in a way that a few of our competitors can do 1, 2 or 3 or whatever, but no one can do them at the scale that we can.

And so -- I guess that's just a way of saying, we also -- I think that Steve Lindsay and the team and Mary Lynn Yakel, the team that manages our strategic relationships with our larger employers, in particular, is very focused on taking every one of these as an opportunity to increase the number of services we offer, which, again, in a frugal environment may really help us out.

We can -- I mean there really are genuinely scale advantages there that we can take advantage of and, in part, pass on to our clients.

Don, this is Steve.

Just to add one comment.

I may be the only person in America that actually had a business meeting today face-to-face.

6 feet away from people, proper social distancing.

One of our health plan partners was waylaid here in Utah.

They came out for a ski trip and all the ski resorts were closed, and so they asked if we want to go lunch with them.

And so that's exactly what they said, though, we were talking about what they're looking for, and they said, "Look, we want to expand our partnership with you.

What do you know about individual coverage HRAs?" I see HRAs are ICHRAs, as people say, and had a nice discussion about it.

So I think what I'm thrilled about as I'm out with our partners is that we can say yes so much more often.

And not just, yes, we can do it, but yes, we do it in scale, which is pretty exciting.

Our next question coming from the line of Mark Marcon with Baird.

Just with regards to the slight economic volatility that we may end up experiencing, how are you thinking about the amount of increase in COBRA activity?

And how does that actually flow through in terms of when somebody goes on COBRA?

And what's the incremental expense?

And how should we think about that?

And then as it relates to the rate environment, how are you thinking about how your competitors may react with regards to increasing their monthly account fees?

Sure.

On the COBRA point, let me say, yes, sort of an A -- a part A and a part B. And the part A was sort of when might that activity hit, et cetera.

And the answer really is we don't know.

But I could male answer syndrome you, but I won't.

The second part of your question regarding COBRA was sort of when someone goes on COBRA, how does it work?

Depending on the arrangement, there are sort of 2 components to the revenue stream from COBRA.

One is a general fee that's typically on a per-employee basis rather than per-participant basis, that sort of reflects the fact that we're there, we're at the ready.

And there's a general -- all businesses have a general amount of churn that occurs and so forth.

So that doesn't change very much.

But what does change is the acceptance rate.

And there, essentially, the way that it works, as I think you know, is the law allows us to retain a portion -- a small portion of the premiums to cover our expenses.

So the more people that are -- actually, it comes back to -- you have to offer COBRA to everyone regardless of why they left your employment.

So in a different environment, right, you might find that, well, if people were leaving for their next job and their next job had health insurance, you have to send them the same paperwork, but they don't take it.

Here, you may see more people take it.

And so that's sort of the way the economics work, that's when the economics can get better for you.

But -- and then as I said earlier, we're going to continue to look at how we can offer more to these participants so that they have a number of options depending on where their needs are.

But -- so I don't think anything would happen immediately in the first quarter or second quarter, but in terms of -- in the first quarter in terms of economics, but as things spool out, I think we might see something there.

Obviously, some of this will depend on legislation, too, and what Congress may mandate that employers do one way or another.

And then your second question, can you repeat the second one?

I kind of remember it, but I don't want to get it wrong.

Yes.

Just -- some of your competitors have been a little bit more aggressive with regards to the monthly account fees, thinking that they're going to make it up in terms of rates.

And so I would think that some of them are upside down on that part of the equation.

And I'm wondering, if you go back to your '07 through '09 experience, what did you end up seeing with regards to how quickly they started adjusting and how did that competitive dynamics work?

Yes, in the '08 -- I mean that's exactly what happened in that period where you did have people who were kind of upside down.

And either they exited the business or they adjusted.

And they did that in fairly short order.

And I have to believe that, to some extent, in sales processes and the like that just as we are, that all of our competitors are looking at this issue right now.

And what I think is maybe the difference is that we are all looking at it from different perspectives depending on where we are in the industry.

We -- as I commented upfront, the way we see the marketplace going is that people want a total solution that includes the HSA and the complementary program.

Just because you happen to be a custodian or you happen to be an investment firm or what have you, doesn't mean that they only want this from you.

They want -- that they only want that service.

They want you to provide the solution looked at from their perspective, and we're in a great position to do that.

And one of the happy accidents in this context is that looked at in the aggregate, that solution is far less exposed to rate uncertainty and variability.

So we think we have a lot of levers that we can pull and that's reflected in the data.

I mean if you look at -- as Devenir described, the average HSA generates more than 50% of its revenue from cash, net interest margin.

That number would actually be bigger if the accounting were the same way we do it.

That is to say -- and I'm not saying it has to be, but that is to say because we're not a bank, we do gross accounting.

But the point is that most HSAs generate most of their profits from net interest and to the extent that you are at a place where that's sort of all you're doing, you -- in this kind of environment, you can't make it up on volume.

Now -- so I think the net of all that is to say, I think we and other competitors who are on the -- but certainly, we where -- we have, we think, the service that people want, and that provides us some different -- provides us some sort of cushion, for lack of a better term, from rate variability, we think we'll be in a good spot.

But as -- to answer your question, I think people are looking at it right now.

Our next question coming from the line of Sandy Draper with SunTrust.

A lot of my questions have been asked.

But maybe one, I think it was about a year ago or maybe at the end of last year, you guys talked about a lot of new initiatives, investments in technology and other areas that because things were going well.

You had a lot of margin.

You were going to -- you were essentially more aggressively investing in the business.

It sounded like what you -- in the prepared comments that you certainly weren't slowing down any on the integration, but are any of those projects being sort of put on the back burner right now as things that you can do to offset and sort of factor in the guidance how you're holding maybe EBITDA a little bit better, even as there's a headwind?

Are you delaying those things?

Or are those things still pretty much going as planned and it's really just the cost savings you get as you continue to integrate the businesses?

I think at the moment, really the latter.

We -- the things that -- as an example -- I mean probably the prime example of this, as we said, we -- at the time, we are -- we've made a considerable investment to assure ourselves that as the entire world, including we, move from kind of from on-prem data to cloud-based data, right, that we can develop in a scalable way and continue to get product to market fast and all that kind of stuff and that's definitely a future-facing investment.

We've tried to design what we do in a way that it generates return along the way.

And most of that return is not in interest rate, et cetera.

It's in the speed to bring product to market and, therefore, lower development costs.

So these changes haven't really affected the IRR there at this point, but it is something we'll look at.

We'll probably have a discussion on this topic, for example, at a Board level, just to think about what we're doing.

We're certainly mindful of the fact that if we needed or if we felt that it was prudent to manage cash or something along those lines, then those are the kind of things we would do because that you're effectively increasing cost of capital.

But for the moment, since the return on those projects is not based on changes in interest rate, there's no reason not to do them.

And we've always said that we're prepared to do things as long as they -- we feel like they're generating a positive return.

We're going to do things that would generate the most positive return to you as investors and so that's what we're doing.

Great.

That's really helpful.

And then just a quick one, maybe either for you, Jon, I think you said, or Darcy.

I think you said you're pretty much assuming the $30 million reduction in revenue guidance from the last time you gave it, you're assuming it's pretty much all flowing through to the EBITDA.

Was that correct?

Yes, Darcy, you want to hit that one?

Yes, that's correct.

We gave a little bit broader range on -- there may be some uncertainty that we've included in the revenue, but generally speaking, that's correct.

The rate information we gave flows to the bottom line.

Our next question coming from the line of Allen with Bank of America.

On the 4% reduction in revenue guidance, I guess, what would need to happen in order to miss this new range?

Would LIBOR and treasuries have to go below zero?

Is there any way to just kind of frame what's embedded in this updated range?

Yes.

The short answer is, yes.

That is to say we have not assumed negative rates, mostly because, very candidly, we're not exactly sure how to do so.

I hate to put it that way.

But in other words, if a negative rate is really a fee, what do you do with that?

And so -- and we've had a lot of conversations both with the folks who advise us from a policy perspective, but also with our bank partners and the like.

And certainly, Jay Powell has said that he would be extremely reticent, notwithstanding this situation to go to negative rates, that he is not sure it's a viable policy tool.

So I mean that's certainly something we have not assumed.

Second, I guess, I'd say -- and then that's the biggest thing.

I should -- I'll stop there, actually.

And there are some other things that could occur that would have modest impacts, but that's about it.

We've tried to be as conservative as we can, recognizing that these are good times to be conservative.

Okay.

And then for my follow-up, have you seen -- I know it's very, very early, but have you seen any increased spending trends as it relates to the coronavirus or any shifting of assets from invested assets to cash?

Or is there anything that's -- you're able to call out at this point?

Not really.

And I'm showing no further questions at this time.

I would like to turn the call back over to Mr. Jon Kessler for closing remarks.

Yes, thanks.

Thanks, everyone, for being patient with us.

Today, we certainly went a little long, but probably for a good reason.

And we'll continue to try and keep you informed as we know more.

But I think kind of the message that you heard today is a little bit -- obviously, we're not ecstatic about the rate environment, nobody is, but it's also true that as Ted said, we've got a team that's performed extremely well and really performed extraordinarily over the last few months and is ready to do more.

And that's what we're here to do to deliver for you.

So thanks for your patience, and we'll keep at it.

Ladies and gentlemen, that does conclude our conference for today.

Thank you for your participation.

You may all disconnect.

Good day.

Thank you, operator.

Thank you.