The Utah-based managed care company HealthEquity, Inc. (NASDAQ: HQY) announced earlier this month the acquisition of Further, a leading provider of health savings accounts (HSA) and consumer-directed benefit administration services. HealthEquity is paying $500 million for Further, approximately 8.33x the company’s annualized revenue run-rate and 41.7x estimated EBITDA.
Further is a leading provider of HSA and consumer-directed benefit administration services, and the nation’s ninth-largest HSA custodian overall. Further is also a technology leader in employer-funded Voluntary Employees’ Beneficiary Association (VEBA) trust administration. VEBAs are triple-tax advantaged health accounts like HSAs, that cover medical costs while employed or post-retirement.
HealthEquity and its subsidiaries administer HSAs and other consumer-directed benefits for its more than 12 million accounts in partnership with employers, benefits advisors, and health and retirement plan providers.
The acquisition of Further and its technology expands HealthEquity’s leadership in the growing HSA market. Further also brings approximately 28,000 employer clients and over 300,000 consumer-directed benefit accounts, including FSAs, HRAs and VEBAs into HealthEquity’s network. HealthEquity expects to achieve an additional $15 million in efficiencies on an annualized basis within three years, with $55 million of one-time costs incurred over that time period.
Willkie Farr & Gallagher LLP is serving as legal counsel and Perella Weinberg Partners LP is serving as exclusive financial advisor to HealthEquity. Stella has engaged Taft Stettinius & Hollister LLP for legal counsel and Wells Fargo Securities as an exclusive financial advisor.
According to search results in our Healthcare Deals Database, the market for HSA providers and administrators appears to be niche, at least for the time being. However, HealthEquity had a pretty strong financial year, with revenues of $733.6 million, an increase of 38% compared to $532.0 million in the previous year. Maybe this deal is just a sign of what’s to come.
