WEX’s Benefits and Corporate-Services Units Growing Faster Than Fleet Services

Best known for its big fleet-fueling card business, WEX Inc. lately is getting stronger growth from its two other segments, health-care and employee benefits and corporate and travel services. WEX reported Thursday that total fourth-quarter purchase volume grew 8.4% to $20.1 billion from $18.5 billion a year earlier.

Portland, Maine-based WEX said travel and corporate-payments service generated $9.64 billion in purchase volume, up 17.4% from $8.21 billion in 2018’s fourth quarter. Fleet purchase volume totaled $9.42 billion, up only 0.9%, while employee and health-benefits-related purchases rose 5.2% to $1.05 billion.

Fleet services, which include cards for the Shell and Chevron brands, remain by far WEX’s biggest revenue generator, pulling in $260.8 million in the fourth quarter, but up only 2.7% from $253.8 million 2018’s last quarter. One reason for the slow growth was falling gas prices: over the year, the average U.S. price per gallon charged to WEX accounts fell nearly 5% to $2.80 per gallon. Payment-processing transactions in the segment increased 9.3% to 126.7 million.

Meanwhile, corporate and travel payments generated $95.7 million in revenue, up 22.7%, while the employee and health-benefits unit’s revenues jumped 69.1% to $83.6 million. Last March WEX acquired Discovery Benefits Inc., an employee-benefits administrator for more than 1 million consumers in all 50 states, for $425 million in cash.

The company is continuing its run of acquisitions this year. Last month WEX announced an agreement to acquire eNett, a business-to-business payments software company specializing in the travel market, and Optal, a specialist provider of B2B transactions, for approximately $1.28 billion in cash and 2 million shares of WEX common stock. The deal is expected to close by mid-year.

“The fourth quarter built upon the momentum from earlier in the year, marked by robust transaction-volume growth, strong performance from acquisitions, significant contribution from our previous contract signings and meaningful new contract wins,” Melissa Smith, WEX’s chairperson and chief executive, said in a statement.

In all, WEX reported fourth-quarter net income of $54.4 million, up 156% from $21.3 million a year earlier, on revenues of $440 million, a 15.4% increase from $381.2 million.