Higher One 8-K Higher One Holdings, Inc. Reports Fourth Quarter and Full Year 2015 Financial Results

Exhibit 99.1

Higher One Holdings, Inc. Reports Fourth Quarter and Full Year 2015 Financial Results

● Fourth quarter gross revenue equals $49.4 million, full year revenue equals $204.2

● Payments revenue in the fourth quarter increases 5%, to $21.4 million

● Campus Labs divestiture closed, gain of $58.2 million realized

New Haven, CT,February 18, 2016 –Higher One Holdings, Inc.(NYSE: ONE) (“Higher One” or the “Company”), today announced financial results for the fourth quarter and full year for 2015. The Company reported fourth quarter 2015 gross revenue of $49.4 million,compared to $53.1 million in the fourth quarter 2014, and full year revenue of $204.2 million, compared to $214.4 million in 2014. Non-GAAP adjusted diluted EPS was $0.10 for the quarter and $0.44 for the full year 2015, compared to $0.14 for the fourth quarter and $0.59 for the full year of 2014.

Marc Sheinbaum, President and Chief Executive Officer, said, “We experienced solid organic growth in our Payments business this quarter, as processing volumes grew and we continued to add new business.”

Sheinbaum added, “We also executed on three key initiatives this quarter, which are vital to moving the company forward. First, we closed on the sale of the Campus Labs business and simultaneously used a portion of the proceeds to pay down a significant portion of our debt. Second, we entered into consent orders with both the Federal Reserve and the FDIC which include agreements on the total amount of customer restitution and penalties. Finally, we signed an agreement with Customers Bank under which we will sell our Disbursements business in a transaction we expect to close in the second quarter of 2016. By executing on these three actions, we are now better positioned to review the strategic options for the remaining Payments business.”

GAAP financial results for thefourth quarter of 2015 compared to thefourth quarter of 2014:

● Gross revenue decreased 7% to $49.4 million in the fourth quarter of 2015, compared to revenue of $53.1 million for the fourth quarter of 2014. Net revenue reflects an increase in the allowance for potential customer restitution from $30.6 million to $55.0 million, related to the Federal Reserve and FDIC settlements. As a result, net revenue was $24.4 million lower than gross revenue this quarter.

● The Company recorded net income of $16.7 million for the fourth quarter of 2015, compared to net income of $4.1 million recorded for the fourth quarter of 2014. The net income recorded in the fourth quarter of 2015 reflects the gain on the sale of the Campus Labs business. GAAP diluted earnings per share was $0.34 for the fourth quarter of 2015, compared to GAAP diluted earnings per share of $0.09 for the fourth quarter of 2014.

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GAAP financial results forfull year 2015 compared tofull year 2014:

● Full year gross revenue decreased 5% to $204.2 million in 2015, compared to revenue of $214.4 million for the full year 2014.

● The Company recorded net income of $10.9 million in 2015, compared to net income of $15.0 million recorded for the full year 2014. GAAP diluted earnings per share was $0.23 for 2015, compared to GAAP diluted earnings per share of $0.31 for 2014.

Non-GAAP financial results for thefourth quarter of 2015 compared to thefourth quarter of 2014:

● Non-GAAP adjusted EBITDA was $11.9 million in the fourth quarter of 2015, compared to $14.7 million in the fourth quarter of 2014

● Non-GAAP adjusted net income was $4.8 million for the fourth quarter of 2015, compared to $6.7 million for the fourth quarter of 2014

● Non-GAAP adjusted diluted earnings per share was $0.10 for the fourth quarter of 2015, compared to $0.14 for the fourth quarter of 2014

Non-GAAP financial results for thefull year 2015 compared to thefull year 2014:

● Non-GAAP adjusted EBITDA was $51.4 million in 2015, compared to $59.6 million in 2014

● Non-GAAP adjusted net income was $21.0 million for the full year 2015, compared to $28.4 million for the full year 2014

● Non-GAAP adjusted diluted earnings per share was $0.44 for the year, compared to $0.59 for the full year 2014

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In addition to consolidated financial information, the Company is providing select financial information for its three lines of business: Disbursements; Payments; and Data Analytics.

Business-line financial resultsfor thefourth quarter of 2015 compared to thefourth quarter of 2014 (in thousands):

● Disbursements revenue is comprised of both subscription fees for our Refund Management disbursement service as well as the transaction-based sources of interchange and service fees derived through OneAccounts. The loss from operations in the fourth quarter of 2015 reflects the impact of the Federal Reserve and FDIC settlements, which resulted in an additional allowance for customer restitution of $24.4 million and civil money penalties and related administrative costs of $6.0 million.

Disbursements		2015			2014		% Change
	Gross Revenue	$	28,006		$	32,887		-14.8	%
	Adjusted EBITDA		5,271			7,623		-30.9	%
	Income (loss) from Operations		(28,876	)		4,620		NM

● Payments revenue is derived through our CASHNet and Campus Solutions products and consists of recurring software subscription fees as well as transactional fees generated by payment plan enrollments and payment processing convenience fees.

Payments		2015		2014		% Change
	Gross Revenue	$	21,351	$	20,238		5.5	%
	Adjusted EBITDA		6,134		5,689		7.8	%
	Income from Operations		3,234		2,809		15.1	%

● Data Analytics revenue was derived through our Campus Labs products and was comprised mostly of subscription fees, accompanied by smaller one-time support and implementation fees. The Data Analytics business was sold during the fourth quarter of 2015 and the results of the Data Analytics business are presented as discontinued operations. The Data Analytics business generated adjusted EBITDA of $539 and $1,435 during the fourth quarter of 2015 and 2014, respectively. The results of the fourth quarter of 2015 reflect the period through the disposition of the business on November 25, 2015, whereas the fourth quarter of 2014 reflects a full quarter of activity.

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Business-line financial resultsfor thefull year 2015 compared to thefull year 2014 (in thousands):

● Disbursements revenue is comprised of both subscription fees for our Refund Management disbursement service as well as the transaction-based sources of interchange and service fees derived through OneAccounts.

Disbursements		2015			2014		% Change
	Gross Revenue	$	120,936		$	136,720		-11.5	%
	Adjusted EBITDA		24,030			35,941		-33.1	%
	Income (loss) from Operations		(44,941	)		15,132	NM

● Payments revenue is derived through our CASHNet and Campus Solutions products and consists of recurring software subscription fees as well as transactional fees generated by payment plan enrollments and payment processing convenience fees.

Payments		2015		2014		% Change
	Gross Revenue	$	83,272	$	77,693		7.2	%
	Adjusted EBITDA		22,083		18,507		19.3	%
	Income from Operations		10,007		6,976		43.4	%

● Data Analytics revenue was derived through our Campus Labs products and was comprised mostly of subscription fees, accompanied by smaller one-time support and implementation fees. The Data Analytics business was sold during the fourth quarter of 2015 and the results of the Data Analytics business are presented as discontinued operations. The Data Analytics business generated adjusted EBITDA of $5.3 million and $5.1 during 2015 and 2014, respectively. The results for this line of business for 2015 reflect the year through the disposition of the business on November 25, 2015, whereas the results for 2014 reflect a complete year of activity.

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Conference Call Information

Higher One will host a conference call at 8:30 a.m. EST today to discuss fourth quarter results. The dial-in phone number is 866-499-3420 for domestic listeners and 678-562-4219 for international listeners. The conference ID number is 18902953. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures can be accessed through Higher One’s investor relations website at http://www.ir.higherone.com. In addition, an archive of the webcast will be available for 90 days through the same link. A replay of the call will be available at 855-859-2056 for domestic listeners and 404-537-3406 for international listeners. Please use the passcode 18902953 to access the replay.

About Higher One Holdings

Higher One Holdings, Inc. (NYSE: ONE) is a leading financial technology company focused on providing cost-saving solutions that enhance student service for the business office of colleges and universities. Higher One’s technologies for higher education institutions streamline the processes of financial aid disbursement and payment acceptance. Higher One also provides options for students and families to manage college-related expenses, such as unique student-banking services, and financial education through $tart with Change. Higher One supports more than 1,500 college and university campuses and more than 9 million students across the U.S. More information can be found at www.higherone.com.

Forward-Looking Statements

This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Management’s projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied.  Forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should” or similar words intended to identify information that is not historical in nature.  Forward-looking statements contained herein include, among others, statements concerning management’s expectations about future events and Higher One’s operating plans and performance, bank partners, the regulatory environment, banking fees, litigation, sales, and the expected benefits of acquisitions, and such statements are based on the current beliefs and expectations of Higher One management, as applicable, and are subject to known and unknown risks and uncertainties. There are a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. These statements speak only as of the date they are made, and the Company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. For further information regarding the risks associated with Higher One’s business, please refer to Higher One’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the most recent fiscal year end, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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Use of Non-GAAP Financial Measures

This release includes certain metrics presented on a non-GAAP basis, including non-GAAP adjusted EBITDA, non-GAAP adjusted net income, and non-GAAP adjusted EPS. We believe that these non-GAAP measures, which exclude amortization of intangibles, stock-based compensation, and certain non-recurring, non-cash impacts and other adjustments to our results, all net of taxes, provide useful information regarding normalized trends relating to the company’s financial condition and results of operations. Reconciliations of each non-GAAP measure to its closest comparable GAAP measure are included in this press release.

Contacts

Investor Relations:	Patrick Pearson, 203-776-7776 x4421, ppearson@higherone.com
Media Relations:	Shoba Lemoine, 203-776-7776 x4503, slemoine@higherone.com

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Higher One Holdings, Inc.

Condensed Consolidated Statements of Operations

(In thousands of dollars, except share and per share amounts)

(unaudited) 

	Three Months Ended						Year Ended
	December 31,						December 31,
	2015			2014			2015			2014
Revenue:
Account revenue	$	26,660		$	31,578		$	115,183		$	131,053
Payment transaction revenue		16,562			15,579			64,059			58,231
Higher education institution revenue		5,924			5,781			24,197			24,219
Other revenue		211			187			769			910
Gross revenue		49,357			53,125			204,208			214,413
Less: allowance for customer restitution		(24,370	)		-			(46,250	)		(8,750	)
Revenue		24,987			53,125			157,958			205,663
Cost of revenue		23,487			24,972			99,534			100,607
Gross margin		1,500			28,153			58,424			105,056
Operating expenses:
General and administrative		15,464			15,588			65,728			61,150
Product development		1,682			1,362			6,579			5,840
Sales and marketing		3,428			3,774			13,909			15,958
Restructuring charge		106			-			680			-
Civil money penalty and adminstrative costs related to customer restitution		6,026			-			6,026			-
Costs related to planned disposal of disbursements business		436			-			436			-
Total operating expenses		27,142			20,724			93,358			82,948
Income (loss) from continuing operations		(25,642	)		7,429			(34,934	)		22,108
Interest income		19			19			82			92
Interest expense		(3,031	)		(633	)		(6,073	)		(2,546	)
Other income (loss)		78			(883	)		1,435			678
Net income (loss) before income taxes		(28,576	)		5,932			(39,490	)		20,332
Income tax expense (benefit)		(9,664	)		2,412			(13,055	)		8,036
Income (loss) from continuing operations		(18,912	)		3,520			(26,435	)		12,296
Discontinued operations:
Income (loss) from operations		(656	)		955			2,145			4,310
Gain on disposal		58,153			-			58,153			-
Income tax expense		(21,934	)		(363	)		(23,004	)		(1,639	)
Income from discontinued operations		35,563			592			37,294			2,671
Net income	$	16,651		$	4,112		$	10,859		$	14,967
Weighted average shares outstanding
Basic		47,797,671			47,295,685			47,653,763			47,209,780
Diluted		48,622,870			47,696,315			48,186,437			48,050,039
Earnings per share of common stock - basic
Continuing operations	$	-0.40		$	0.07		$	-0.55		$	0.26
Net income per share	$	0.35		$	0.09		$	0.23		$	0.32
Earnings per share of common stock - diluted
Continuing operations	$	-0.40		$	0.07		$	-0.55		$	0.26
Net income per share	$	0.34		$	0.09		$	0.23		$	0.31
Net income	$	16,651		$	4,112		$	10,859		$	14,967
Other comprehensive loss
Foreign currency translation adjustment		(113	)		-			(113	)		-
Comprehensive income	$	16,538		$	4,112		$	10,746		$	14,967

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Higher One Holdings, Inc.

Condensed Consolidated Operating Segment Statements of Operations

(In thousands of dollars, except share and per share amounts)

(unaudited)

	Three Months Ended December 31,						Year Ended December 31,
	2015				2014		2015				2014
Revenue
Disbursements	$	3,636		(1)	$	32,887	$	74,686		(2)	$	127,970	(3)
Payments		21,351				20,238		83,272				77,693
Total revenues		24,987				53,125		157,958				205,663
Cost of revenue
Disbursements		13,456				15,422		58,755				61,540
Payments		10,031				9,550		40,779				39,067
Total cost of revenue		23,487				24,972		99,534				100,607
Gross margin
Disbursements		(9,820	)			17,465		15,931				66,430
Payments		11,320				10,688		42,493				38,626
Total gross margin		1,500				28,153		58,424				105,056
Operating expenses
Disbursements		19,056				12,845		60,872				51,298
Payments		8,086				7,879		32,486				31,650
Total operating expenses		27,142				20,724		93,358				82,948
Income from continuing operations
Disbursements		(28,876	)			4,620		(44,941	)			15,132
Payments		3,234				2,809		10,007				6,976
Total income (loss) from continuing operations	$	(25,642	)		$	7,429	$	(34,934	)		$	22,108

(1) Reflects the impact of the allowance for potential customer restitution of $24.4 million.

(2) Reflects the impact of the allowance for potential customer restitution of $46.3 million.

(3) Reflects the impact of the allowance for potential customer restitution of $8.75 million.

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Higher One Holdings, Inc.

Condensed Consolidated Balance Sheets

 (In thousands of dollars, except share and per share amounts)

(unaudited)

	December 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	26,868		$	40,022
Investments in marketable securities		-			249
Accounts receivable		5,052			4,765
Income receivable		9,227			9,053
Prepaid expenses and other current assets		8,059			7,697
Current assets of discontinued operations		-			4,272
Total current assets		49,206		$	66,058
Deferred costs		3,753			4,187
Fixed assets, net		42,288			46,315
Intangible assets, net		31,430			37,106
Goodwill		53,022			53,023
Loan receivable related to New Markets Tax Credit financing		7,633			7,633
Other assets		2,909			2,523
Restricted cash		2,729			2,725
Non-current assets of discontinued operations		-			33,982
Total assets	$	192,970		$	253,552
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,040		$	3,276
Accrued expenses		19,675			25,833
Deferred revenue		17,145			16,216
Current liabilities of discontinued operations		-			9,060
Total current liabilities	$	39,860		$	54,385
Deferred revenue and other non-current liabilities		5,414			3,858
Loan payable and deferred contribution related to New Markets Tax Credit financing		8,561			8,871
Debt		29,000			94,000
Deferred tax liabilities		1,659			95
Non-current liabilities of discontinued operations		-			161
Total liabilities	$	84,494		$	161,370
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $.001 par value; 200,000,000 shares authorized; 59,921,503 shares issued and 48,008,477 shares outstanding at December 31, 2015; 59,570,839 shares issued and 47,657,813 shares outstanding at December 31, 2014		60			60
Additional paid-in capital		191,136			185,588
Treasury stock, 11,913,026 shares at December 31, 2015 and 2014		(137,899	)		(137,899	)
Accumulated other comprehensive loss		(113	)		-
Retained earnings		55,292			44,433
Total stockholders’ equity		108,476			92,182
Total liabilities and stockholders’ equity	$	192,970		$	253,552

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Higher One Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

 (In thousands of dollars)

(unaudited)

	Year Ended December 31,
	2015			2014
Cash flows from operating activities
Net income	$	10,859		$	14,967
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,618			19,072
Amortization of deferred finance costs		4,275			484
Gain on disposition of data analytics business		(58,153	)		-
Stock-based compensation		6,589			4,574
Deferred income taxes		255			2,967
Income tax benefit related to exercise of stock options		(14	)		(49	)
Other income		(314	)		(35	)
Loss on disposal of fixed assets		149			118
Changes in operating assets and liabilities:
Accounts receivable		528			(182	)
Income receivable		(174	)		(2,373	)
Deferred costs		(498	)		(2,250	)
Prepaid expenses and other current assets		943			(3,548	)
Other assets		(386	)		(1,612	)
Accounts payable		(299	)		(528	)
Accrued expenses		(6,000	)		(4,776	)
Deferred revenue		2,008			3,381
Net cash provided by (used in) operating activities		(18,614	)		30,210
Cash flows from investing activities
Purchases of fixed assets		(2,681	)		(3,487	)
Additions to internal use software		(4,478	)		(5,295	)
Proceeds from disposition of data analytics business		52,063			-
Proceeds from sale of investments and amounts received from restricted cash		249			25
Proceeds from disposition of equity method investment		-			3,581
Proceeds from development related subsidies		-			3,468
Net cash provided by (used in) investing activities		45,153			(1,708	)
Cash flows from financing activities
Proceeds from line of credit		-			15,000
Repayments of line of credit		(35,000	)		(10,000	)
Payment of deferred financing costs		(4,990	)		-
Excess tax benefit related to stock options		14			49
Proceeds from exercise of stock options		356			203
Net cash provided by (used in) financing activities		(39,620	)		5,252
Effect of exchange rate changes on cash		(73	)		-
Net change in cash and cash equivalents		(13,154	)		33,754
Cash and cash equivalents at beginning of period		40,022			6,268
Cash and cash equivalents at end of period	$	26,868		$	40,022

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Higher One Holdings, Inc.

Unaudited Supplemental Operating Data

(In thousands)

	Three Months Ended
	December 31,	March 31,	June 30,	September 30,	December 31,
	2014	2015	2015	2015	2015
Refund Management SSE (1)	5,078	5,096	5,026	4,918	4,919
change from prior year period	2%	0%	-2%	-2%	-3%
Ending OneAccounts (2)	2,135	2,179	2,007	2,038	1,965
change from prior year period	-3%	-5%	-4%	-7%	-8%

(1)

Refund Management SSE is defined as the number of students enrolled at institutions that have signed contracts to use the Refund Management disbursement service by the end of a given period as of the date the contract is signed (using the most up-to-date Integrated Postsecondary Education Data System data at that point in time). Refund Management SSE for all periods other than September 30, 2015 reflects Fall 2013 provisional enrollment data from IPEDS. The effect of updating Refund Management SSE as of September 30, 2015 resulted in a decrease of approximately 98,000 SSE from the enrollment figures prior to that point in time.

(2)

Ending OneAccounts is defined as the number of accounts with a non-zero balance at the end of a given period.

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Higher One Holdings, Inc.

Unaudited Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

(In thousands)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2015			2014			2015			2014
	(unaudited)
	(in thousands)
Net income	$	16,651		$	4,112		$	10,859		$	14,967
Interest income		(19	)		(19	)		(82	)		(92	)
Interest expense		3,356			823			7,250			3,266
Income tax expense		12,270			2,775			9,949			9,675
Depreciation and amortization		5,189			4,949			21,618			19,072
EBITDA		37,447			12,640			49,594			46,888
Restructuring charge		106			-			680			-
Stock-based compensation expense		1,712			1,147			6,589			4,574
Allowance for customer restitution		30,396			-			52,276			8,750
Costs related to planned disposal of disbursements business		436			-			436			-
Gain on disposition of data analytics business		(58,153	)		-			(58,153	)		-
Campus Solutions settlement received, net of related expense		-			960			-			(644	)
Adjusted EBITDA	$	11,944		$	14,747		$	51,422		$	59,568

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Unaudited Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Adjusted Net Income and Adjusted Diluted EPS

(In thousands, except share and per share amounts)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2015			2014			2015			2014
	(unaudited)
	(in thousands)
Net income	$	16,651		$	4,112		$	10,859		$	14,967
Restructuring charge		106			-			680			-
Allowance for customer restitution and related costs		25,933			-			47,813			8,750
Gain on disposition of data analytics business		(58,153	)		-			(58,153	)		-
Costs related to planned disposal of disbursements business		436			-			436			-
Campus Solutions settlement received, net		-			960			-			(644	)
Stock-based compensation expense - non-qualified stock option grants		1,439			903			5,618			3,284
Amortization of intangibles		1,606			1,850			7,066			7,847
Amortization of deferred finance costs		2,617			115			4,274			484
Total pre-tax adjustments		(26,016	)		3,828			7,734			19,721
Tax rate		35.1	%		38.5	%		39.0	%		38.5	%
Tax adjustment		(9,135	)		1,474			3,016			7,593
Adjustments, net of tax		(16,881	)		2,354			4,718			12,128
Civil money penalty related to customer restitution		4,463			-			4,463			-
Release of state tax valuation allowance		285			-			-			-
Stock-based compensation expense - incentive stock option grants		273			245			970			1,290
Total after-tax adjustments		5,021			245			5,433			1,290
Adjusted net income	$	4,791		$	6,711		$	21,010		$	28,385
Diluted weighted average shares outstanding		48,623			47,696			48,186			48,050
GAAP net income per share (diluted)	$	0.34		$	0.09		$	0.23		$	0.31
Non-GAAP adjusted net income per share (diluted)	$	0.10		$	0.14		$	0.44		$	0.59

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