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
00:19full 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
00:33afford a $400 unexpected medical cost. That's a problem. If you're a CEO, health care costs for
00:41your employees are rising much faster than wages. And for policymakers, health care affordability is
00:46at the 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
01:03that that's very recent and too soon to say. But over the past couple of years, as affordability has
01:09continued 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, that
01:32unexpected medical event. Employers offer these through high deductible health plans. And so the behavior
01:39that we're seeing is that as more employees adopt these types of plans, they're better prepared for their
01:44healthcare future. More employers that drive adoption within their employee base can actually
01:51save in terms of the healthcare costs that they're paying for their employees. And so these are solutions
01:57that both require engagement and education. And what we see is more people are engaged in actually
02:03consuming healthcare transparently and are prepared for it. They effectively can set up an account to address
02:10those challenges and, you know, and essentially be better prepared for their future.
02:14You had, Scott, better revenue than expected, better operating profit than expected,
02:21better EPS than expected. And you raise, as I said, your 27 revenue outlook to higher than the highest
02:30street estimate. Why then is your stock down 10% year to date? What are investors getting wrong here?
02:37Well, I think investors across the sector, if you're in healthcare, technology, financial processing,
02:45there is a larger concern around AI dystopia, the challenges on the jobs market. Since we're
02:51provide a solution to, you know, a quarter of employees in the United States, I think people are questioning
02:58what is the impact of AI on the jobs factor. And so as we think about it, you know, we
03:04announced record sales
03:05against a macro backdrop where there was only 181,000 jobs created last year. And so I think
03:13investors, you know, rightly or wrongly are concerned about what is the impact of AI. You know, as an
03:19executive navigating through these things, we're deploying AI across every aspect of our experience.
03:25We're able to deliver to our members a more real-time seamless experience. We consume a lot of software as
03:32well. We're actually still consuming that at the same rate. And so, you know, the software vendors that
03:38have traded down significantly as a buyer of that, we need these software tools. We need these software
03:44tools to be enabled by AI as well. And so I think we're a little bit of a dislocation in
03:49the market
03:49around the true impact of AI, but certainly the concerns around what is the future health of the job
03:56market in the in the United States is a central concern for a lot of for a lot of investors.
04:01Scott, that's actually really interesting, just as you know, as you say, as a consumer of these
04:05software platforms, have you asked anything different of them? Have you thought about trying
04:10to ditch any of them and vibe code it out, as it were? It'd be really difficult to vibe code
04:16out or 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 that
04:32software solution. And then we also develop technology that we release to our customers. And so we're
04:40leveraging all of the models that are available to us. Again, for us to be able to deliver our service
04:45at a lower cost on one side, but to be able to radically enhance the experience. And so we think
04:51about how can we automate a claim? How can we automate a response that a member might have? How can
04:57we go to
04:58the market much faster as we deploy our own technology solution, you know, to better improve our service?
05:04And so I think these are the forces that are at play. But I do not see a world where
05:09we're going to be
05:10replacing core infrastructure that has and reliant upon data and replace those at scale.
05:19Scott, you're in a great position to be able to evaluate inflation. We got a hotter than expected PPI
05:26number this morning, but inflation has been a problem for Americans, especially in health care for many
05:31years in a row. Does it continue? Does it get worse? Do you see any improvement? And how do you
05:37view it?
05:39Scott, health care costs have been rising much faster than every other input cost that we're
05:44associated with. I think in America, we're much more comfortable treating illness than prevention.
05:50And so we have to do something about it. All of us have a role in that. And I think
05:56one of the big
05:57trends that I think has maybe the greatest potential impact is the role that we all play in our own
06:03health care are focused on wellness and prevention, which obviously, if you have an HSA and you can
06:08spend dollars towards that, helps us be more engaged as health care consumers. When we're more engaged as
06:15health care consumers, we make better, more efficient choices. Now, we need that to be applied across the
06:21entire system. We've got great health care in America. It is just unaffordable for most. And so we
06:27have to be able to address this problem. But we all have a role to play in terms of regulators,
06:34policy makers, companies, and individuals. And I'm optimistic that we can actually bend the curve.
06:40in the future.
06:40I'm not trying to innovative things.
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