00:00Health equity is the nation's largest HSA provider, manages over $36 billion in health savings,
00:07and we're joined by the president and CEO, Scott Cutler. Scott, great to have you on the program.
00:12You just put out your earnings, you beat on every line, and you raised your forecast for
00:18full year 2027. Are more Americans just waking up to the savings here? Do they need these savings?
00:27Health care affordability is a central issue for most Americans. One in four Americans cannot afford
00:33a $400 unexpected medical cost. That's a problem. If you're a CEO, health care costs for your
00:41employees are rising much faster than wages. And for policymakers, health care affordability is at
00:46the center of the debate. And so we're really coming to the market with solutions that can help
00:51address that crisis. What sort of behavior changes have you seen, Scott? I'd also be interested to
00:58know whether you can see any more maybe short-term behavior changes if oil prices go up. I realize
01:02that that's very recent and too soon to say. But over the past couple of years, as affordability has
01:08continued to be a concern, how are consumers on your platform changing their behavior?
01:15We play into the market that are health savings accounts. And for those that are not familiar with
01:20it, it's an account that has a triple tax advantage. You can contribute tax-free, it can grow tax-free,
01:26you can spend it tax-free on qualified medical expenditures to be prepared for that medical event,
01:32that unexpected medical event. Employers offer these through high-deductible health plans.
01:38And so the behavior that we're seeing is that as more employees adopt these types of plans,
01:42they're better prepared for their health care future. More employers that drive adoption within
01:49their employee base can actually save in terms of the health care costs that they're paying for their
01:55employees. And so these are solutions that both require engagement and education. And what we see
02:01is more people are engaged in actually consuming health care transparently and are prepared for it.
02:07They effectively can set up an account to address those challenges and essentially be better prepared
02:13for their future. You had, Scott, better revenue than expected, better operating profit than expected,
02:21better EPS than expected. And you raised, as I said, your 27 revenue outlook to higher than the
02:27highest street estimate. Why then is your stock down 10 percent year to date? What are investors getting
02:36wrong here? Well, I think investors across the sector, if you're in health care, technology, financial
02:44processing, there is a larger concern around AI dystopia, the challenges on the jobs market. Since
02:51we're provide a solution to, you know, a quarter of employees in the United States, I think people are
02:57questioning what is the impact of AI on the jobs factor. And so as we think about it, you know,
03:04we announced
03:04record sales against a macro backdrop where there was only 181,000 jobs created last year. And so I
03:12think investors, you know, rightly or wrongly are concerned about what is the impact of AI, you know,
03:18as an executive navigating through these things, we're deploying AI across every aspect of our
03:25experience. We're able to deliver to our members a more real-time seamless experience. We consume a lot
03:31of software as well. We're actually still consuming that at the same rate. And so, you know, the
03:37software vendors that have traded down significantly as a buyer of that, we need these software tools.
03:42We need these software tools to be enabled by AI as well. And so I think we're a little bit
03:48of a
03:48dislocation of the market around the true impact of AI, but certainly the concerns around what is the
03:54future health of the job market in the in the United States is a central concern for a lot of
04:00for a lot of
04:00investors. Scott, that's actually really interesting, just as you know, as you say, as a consumer of
04:05these software platforms. Have you asked anything different of them? Have you thought about trying to
04:10ditch any of them and vibe code it out, as it were? It'd be really difficult to vibe code out
04:17or prompt
04:18away core infrastructure software that enables us to deliver the experience. And so, you know, again,
04:25I think what we're asking of our partners is provide all of the tools to enhance the productivity of
04:32that software solution. And then we also develop technology that we release to our customers. And
04:39so we're leveraging all of the models that are available to us, again, for us to be able to deliver
04:44our service at a lower cost on one side, but to be able to radically enhance the experience. And so
04:51we think about how can we automate a claim? How can we automate a response that a member might have?
04:57How can we go to the market much faster as we deploy our own technology solution, you know,
05:03to better improve our service? And so I think these are the forces that are at play. But I do
05:08not see a
05:08world where we're going to be replacing core infrastructure that has been reliant upon data
05:14and replace those at scale. Scott, you're in a great position to be able to evaluate inflation.
05:24We got a hotter than expected PPI number this morning, but inflation has been a problem for
05:29Americans, especially in health care, for many years in a row. Does it continue? Does it get worse?
05:34Do you see any improvement? And how do you view it? Healthcare costs have been rising much faster
05:42than every other input cost that we're associated with. I think in America, we're much more comfortable
05:47treating illness than prevention. And so we have to do something about it. All of us have a role in
05:55that. And I think one of the big trends that I think has maybe the greatest potential impact is the
06:01role that we all play in our own health care, are focused on wellness and prevention, which obviously,
06:07if you have an HSA and you can spend dollars towards that, helps us be more engaged as health
06:12care consumers. When we're more engaged as health care consumers, we make better, more efficient
06:17choices. Now, we need that to be applied across the entire system. We've got great health care in
06:23America. It is just unaffordable for most. And so we have to be able to address this problem.
06:29But we all have a role to play in terms, you know, in terms of regulators, policymakers,
06:35companies and individuals. And I'm optimistic that we can actually bend the curve.
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