Wex eyes HSA benefit from budget amid pressure
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Business-to-business payments software provider Wex may benefit if the proposed U.S. budget bill expands access to health savings accounts, the company's CEO said last week.
'The big, beautiful bill has the potential for expanding HSA [programs], which would create even more market share for us,' Wex CEO Melissa Smith said at a June 4 investor conference hosted by the financial firm William Blair.
The proposed U.S. budget pending before Congress may increase the number of individuals eligible for an HSA. It also includes provisions that might increase the amount of money consumers can contribute to HSAs and expand options for spending money in the accounts.
The budget proposal could make another 20 million HSA accounts available for a 15% increase, William Blair analysts estimated in a Thursday note to clients.
Portland, Maine-based Wex provides payments software and cards for a host of purposes, including for employers' benefits administration as well as other uses, such as transportation fleet expense management. The company has about a 5% market share in the benefits administration arena, Smith said.
'The overall growth of HSAs has slowed, but we still have a lot of market to continue to penetrate,' Smith said at the conference.
The publicly-traded company has been aggressive in its acquisition strategy in recent years across its segments. On the benefits administration front, it paid $180 million to acquire a health and benefits unit from the financial services company Ascensus in July 2023.
The CEO is also pulling other levers to pump up demand. Wex is in the early stages of increasing spending on sales and marketing this year, she noted at the conference.
The company is under shareholder pressure, as Wex shares have dropped about 20% this year, compared to a 2% decline in the Standard & Poor's 500 index.
In commenting on the stock decline after Smith's comments at the conference, analysts at William Blair said: 'We do not see a near-term catalyst for shares other than a strategic sale or restructuring.' Nonetheless, they said in the note that they don't see that as likely, based on her comments.
At the company's annual meeting last month, about a third of votes cast were against Smith and some other Wex board members, according to a filing with the Securities and Exchange Commission. Of the 30 million votes cast for or against Smith, who is also the Wex board chair, about 10 million were against re-electing her to the board.
While all the directors recommended by the company were ultimately elected, it's uncommon for such polls to generate so much dissent.
In a vote of confidence in the company, Smith's family personally bought 3,721 Wex shares worth about $500,000 last month, according to an SEC filing.
Analysts at Robert W. Baird noted the Smith stock purchase and told clients in a report last Tuesday that they 'view this as a good indication that the company is performing reasonably well.'
A spokesperson for Wex didn't respond to a request for additional comment.
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