Moody’s lifts HealthEquity

Moody's Investors Service said it upgraded HealthEquity, Inc.'s corporate family rating to Ba3 from B1, probability of default rating to Ba3-PD from B1-PD and senior unsecured notes due 2029 to B2 from B3.

The speculative grade liquidity rating is unchanged at SGL-1.

The outlook is stable.

On Sept. 19, HealthEquity announced that it has entered into a definitive agreement to acquire Conduent Inc.’s (B1, stable) BenefitWallet health savings account portfolio.

The agreement contemplates a purchase price of about $425 million for the transition of all accounts, including about 665,000 customer accounts and their about $2.7 billion of assets to HealthEquity.

Management expects the transfer to close in multiple tranches during the first half of 2024.

The purchase is subject to regulatory approval and the satisfaction of other customary closing conditions.

Moody's anticipates HealthEquity will fund the purchase price with equal parts cash and revolving credit facility loans.

“We consider the BenefitWallet purchase a positive credit development since HealthEquity will add billions in HSA assets, thereby boosting our expectations for revenue, earnings and free cash flow,” Edmond DeForest, Moody's senior vice president, said in a news release.

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