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HealthEquity to Acquire WageWorks

Draper—HealthEquity, Inc. (NASDAQ: HQY) (“HealthEquity”), the nation’s largest independent health savings account (“HSA”) non-bank custodian, and WageWorks, Inc., (NYSE: WAGE) (“WageWorks”), a leader in administering HSAs and complementary consumer-directed benefits (“CDBs”), today announced that they have entered into a definitive agreement under which HealthEquity will acquire all of the issued and outstanding shares of common stock of WageWorks for $51.35 per share in cash, representing a total enterprise value of approximately $2 billion. The all-cash offer represents a 28 percent premium to the volume weighted average closing price of WageWorks shares for the 30 trading days prior to HealthEquity’s acquisition proposal becoming public on April 29, 2019.

The acquisition is expected to give HealthEquity access to more of the fast-growing HSA market by expanding its direct distribution to employers and benefits advisors as a single source, premier provider of HSAs and complementary CDBs, including flexible spending accounts, health reimbursement arrangements, COBRA administration and commuter accounts. Its focus on member engagement and remarkable service enables HealthEquity to more fully meet the needs of employers, partners and a broader range of consumers along the continuum of health savings.

Jon Kessler, president and CEO of HealthEquity, commented on the acquisition, “Acquiring WageWorks positions us to accelerate the market-wide transition to HSAs, with greater market access and an end-to-end proprietary platform built to drive members to spend smarter while saving for healthcare in retirement. Together, we can meet employers and employees wherever they are on their journeys to connect health and wealth, while simultaneously accelerating our growth in an expanding industry. This transaction is compelling for team members and stockholders of both companies and it accelerates the strategic goals of both companies immediately by adding WageWorks’ market-leading CDB services to HealthEquity’s highly acclaimed HSA platform.”

Edgar Montes, president and CEO of WageWorks, noted: “The combination of WageWorks and HealthEquity will be transformative in our industry and will amplify our impact among clients, brokers, and policymakers. Together with HealthEquity, WageWorks can bring broader, deeper, more innovative solutions to our customers – giving them greater choice and peace of mind. This transaction recognizes and reflects our strong brand and reputation in the market.”

Stuart C. Harvey, Jr., executive chairperson of WageWorks, said: “This transaction underscores everything we’ve accomplished as we have worked to rebuild WageWorks and emerge stronger than ever.  Our Board of Directors, in line with its fiduciary duties, worked with financial and legal advisors to carefully review the HealthEquity proposal in the context of our business and the industry as a whole, and following that review we are pleased to deliver to WageWorks stockholders the premium value inherent in this transaction.”

Financial Details

HealthEquity has identified significant synergy opportunities and anticipates approximately $50 million in annualized, on-going synergies that will be realized within 24 to 36 months of closing, primarily through custodial and interchange revenue and operating efficiencies. HealthEquity also anticipates generating significant incremental revenue synergies over time as the combined client base takes advantage of the complete offering.

HealthEquity has received from Wells Fargo Bank a debt commitment to finance the acquisition. HealthEquity expects to deleverage rapidly through strong, predictable future cash flow and growth.

The transaction has been approved by the boards of directors of both HealthEquity and WageWorks and is subject to WageWorks’ stockholder approval, regulatory approvals and other customary closing conditions, but is not subject to the availability of financing.  It is expected to close before year-end. HealthEquity expects to provide guidance on the future financial impact of the transaction on or before the closing of the transaction.

Following the close of the transaction, Jon Kessler will serve as President and CEO of the combined company.  Mr. Kessler continued, “We look forward to welcoming the talented WageWorks team into HealthEquity’s “purple” culture of remarkable service to our customers and to each other. This transaction will open new opportunities for both team members and partners. We are committed to ensuring a smooth transition for all of our stakeholders as we expand the benefits we can offer.”

Advisors

Willkie Farr & Gallagher LLP is serving as legal counsel to HealthEquity. Perella Weinberg Partners LP and Wells Fargo Securities are serving as financial advisors to HealthEquity. WageWorks has engaged Wilson Sonsini Goodrich & Rosati P.C. for legal counsel and Evercore as financial advisor.

Investor Conference Call

HealthEquity will hold a conference call to discuss the transaction with investors on Thursday, June 27, 2019, at 8:00 a.m. ET. 

HealthEquity Investor Conference Call
Date:June 27, 2019
Time:8:00 a.m. Eastern Time / 6:00 a.m. Mountain Time
Dial-In:1-844-791-6252 (US and Canada)
 1-661-378-9636 (International)
Conference ID:6767699
Webcast:ir.healthequity.com
A presentation deck will be made available shortly before the conference call.

About HealthEquity

HealthEquity connects health and wealth, delivering health savings account (HSA) and other consumer-driven health and retirement solutions in partnership with over 45,000 employers and 141 health, retirement, and other benefit plan providers nationwide. HealthEquity members have access to its end-to-end platform and remarkable “purple” service to become consumers of healthcare while building health and retirement savings for tomorrow. HealthEquity is the custodian of $8.3 billion in assets for 4.1 million HSA members nationwide. For more information, visit www.HealthEquity.com

About WageWorks

WageWorks, Inc. (NYSE: WAGE) is a leader in administering Consumer-Directed Benefits (CDBs). WageWorks is solely dedicated to administering CDBs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, COBRA, and other employee benefits. WageWorks is headquartered in San Mateo, California, with offices in major locations throughout the United States. For more information, visit www.wageworks.com.

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