Core Insights - The article compares GoodRx Holdings, Inc. (GDRX) and HealthEquity (HQY) to determine which stock is more attractive to value investors [1] - GDRX has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while HQY has a Zacks Rank of 3 (Hold) [3] Valuation Metrics - GDRX has a forward P/E ratio of 12.80, significantly lower than HQY's forward P/E of 27.57 [5] - The PEG ratio for GDRX is 1.15, while HQY's PEG ratio is 1.32, suggesting GDRX is more favorably valued considering expected earnings growth [5] - GDRX's P/B ratio is 2.64 compared to HQY's P/B of 4.2, further indicating GDRX's relative undervaluation [6] Value Grades - GDRX has earned a Value grade of B, while HQY has a Value grade of D, highlighting GDRX's superior valuation metrics [6] - The combination of solid earnings outlook and favorable valuation figures positions GDRX as the better value option currently [6]

Core Viewpoint - HealthEquity (HQY) shares have declined approximately 10.4% over the past month, underperforming the S&P 500, raising questions about the potential for a breakout or continued negative trend leading up to the next earnings release [1] Group 1: Earnings Report and Estimates - The consensus estimate for HealthEquity has increased by 8.01% over the past month, indicating a positive trend in estimates [2] - The stock has received a Zacks Rank 2 (Buy), suggesting expectations for above-average returns in the coming months [4] Group 2: VGM Scores - HealthEquity has a Growth Score of B and a Momentum Score of B, indicating strong performance in these areas [3] - The stock has a Value Score of C, placing it in the middle 20% for this investment strategy, contributing to an overall aggregate VGM Score of B [3]

Core Viewpoint - Growth investors are attracted to stocks with above-average financial growth, but identifying such stocks can be challenging due to inherent risks and volatility [1] Group 1: Company Overview - HealthEquity (HQY) is identified as a promising growth stock, supported by a favorable Growth Score and a top Zacks Rank [2] - The company provides services for managing health care accounts, making it a relevant choice for growth investors [3] Group 2: Earnings Growth - HealthEquity has a historical EPS growth rate of 19.1%, with projected EPS growth of 19.3% for the current year, significantly outperforming the industry average of 8.5% [5] Group 3: Cash Flow Growth - The year-over-year cash flow growth for HealthEquity stands at 25.9%, well above the industry average of -1.5% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 19.3%, compared to the industry average of 7.6% [7] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for HealthEquity, with the Zacks Consensus Estimate for the current year increasing by 9.2% over the past month [8] Group 5: Investment Potential - HealthEquity holds a Zacks Rank of 2 (Buy) and a Growth Score of B, indicating its potential as an outperformer and a solid choice for growth investors [10]

Core Viewpoint - Growth investors are focused on stocks with above-average financial growth, but identifying stocks that can fulfill their growth potential is challenging [1] Group 1: Company Overview - HealthEquity (HQY) is currently recommended as a growth stock due to its favorable Growth Score and top Zacks Rank [2] - The company has a historical EPS growth rate of 19.1%, with projected EPS growth of 15.8% this year, significantly higher than the industry average of 7.7% [5] Group 2: Financial Metrics - HealthEquity's year-over-year cash flow growth is 25.9%, outperforming the industry average of -1.5% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 19.3%, compared to the industry average of 8% [7] Group 3: Earnings Estimates - There has been a positive trend in earnings estimate revisions for HealthEquity, with the Zacks Consensus Estimate for the current year increasing by 6.5% over the past month [8] - HealthEquity has earned a Growth Score of B and carries a Zacks Rank 2 due to positive earnings estimate revisions, indicating it is a potential outperformer for growth investors [10]

Core Insights - HealthEquity, Inc. reported better-than-expected first-quarter results with earnings of 97 cents per share, surpassing the consensus estimate of 88 cents [1] - Quarterly revenue reached $330.8 million, exceeding the Street estimate of $321.17 million [1] Financial Performance - The company achieved record quarterly revenue and record Adjusted EBITDA in the first quarter of fiscal 2026 [2] - HealthEquity raised its fiscal 2026 adjusted EPS guidance to a new range of $3.61 to $3.78, compared to the previous range of $3.57 to $3.74 and the analyst estimate of $3.63 [2] - The revenue outlook for fiscal 2026 remains between $1.28 billion and $1.3 billion, aligning with the $1.3 billion estimate [2] Stock Market Reaction - Following the earnings announcement, HealthEquity shares increased by 9.8% to $113.94 [3] - Analysts adjusted their price targets for HealthEquity after the earnings report [3] Analyst Ratings and Price Targets - JMP Securities analyst maintained a Market Outperform rating and raised the price target from $110 to $117 [5] - B of A Securities analyst maintained a Buy rating and increased the price target from $110 to $125 [5] - RBC Capital analyst maintained an Outperform rating and raised the price target from $112 to $117 [5] - Goldman Sachs analyst maintained a Neutral rating and increased the price target from $94 to $104 [5]

Core Insights - HealthEquity, Inc. (HQY) reported adjusted earnings per share (EPS) of 97 cents for the first quarter of fiscal 2026, exceeding the Zacks Consensus Estimate by 19.8% and showing a year-over-year improvement of 21.3% [2][10] - The company generated revenues of $330.8 million in the fiscal first quarter, surpassing the Zacks Consensus Estimate by 3% and reflecting a 15% increase from the prior-year quarter [3][10] - HealthEquity's total number of Health Savings Accounts (HSAs) reached 9.9 million, a 9% year-over-year increase, with total HSA assets amounting to $31.3 billion, up 15% year over year [4][5] Revenue Breakdown - Service revenues for the quarter totaled $119.8 million, up 1.3% year over year, driven by an increase in HSAs and invested HSA assets [7] - Custodial revenues reached $156.5 million, marking a 28.6% increase from the previous year, while interchange revenues totaled $54.6 million, up 14.4% year over year [8][10] Margin and Profitability - HealthEquity's gross profit rose 19.9% to $224.3 million, with the gross margin expanding by 270 basis points to 67.8% [11][10] - Operating profit improved significantly by 99.6% to $83.1 million, with the operating margin expanding by 1060 basis points to 25.1% [13][10] Financial Position - At the end of the first quarter of fiscal 2026, HealthEquity had cash and cash equivalents of $287.9 million and total debt of $1.06 billion, unchanged from the previous quarter [14] - Net cash provided by operating activities was $64.7 million, slightly down from $65.4 million a year ago [14] Guidance and Future Outlook - HealthEquity has reiterated its revenue guidance for fiscal 2026, projecting revenues between $1.285 billion and $1.305 billion, with adjusted EPS expected in the range of $3.61-$3.78 [15] - The company added 150,000 new HSAs during the quarter and reported a significant reduction in fraud-related costs, which dropped from $11 million to $3 million, enhancing margins and member trust [17][18]

Core Viewpoint - HealthEquity (NASDAQ: HQY) has shown strong performance over the past year, with a 28% increase in share value, driven by growth in health savings accounts (HSAs) and sustained high interest rates [1] Company Performance - The company's shares have continued to perform well, indicating positive market sentiment and investor confidence [1] Market Trends - The growth in health savings accounts (HSAs) is a significant factor contributing to the company's success, reflecting broader trends in the healthcare and financial sectors [1] - Higher interest rates have also played a role in enhancing the company's financial performance, suggesting a favorable economic environment for HealthEquity [1]

Group 1: Earnings Performance - HealthEquity reported quarterly earnings of $0.97 per share, exceeding the Zacks Consensus Estimate of $0.81 per share, and up from $0.80 per share a year ago [1] - The earnings surprise for this quarter was 19.75%, while the previous quarter had a surprise of -2.82% with actual earnings of $0.69 compared to an expectation of $0.71 [2] - Over the last four quarters, HealthEquity has surpassed consensus EPS estimates three times [2] Group 2: Revenue Performance - The company posted revenues of $330.84 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 3.03%, and up from $287.6 million year-over-year [3] - HealthEquity has topped consensus revenue estimates four times over the last four quarters [3] Group 3: Stock Performance and Outlook - HealthEquity shares have increased by approximately 7.2% since the beginning of the year, compared to a 0.9% gain in the S&P 500 [4] - The current consensus EPS estimate for the upcoming quarter is $0.88 on revenues of $319.33 million, and for the current fiscal year, it is $3.60 on $1.3 billion in revenues [8] Group 4: Industry Context - The Medical Services industry, to which HealthEquity belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook [9] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [6]

Financial Data and Key Metrics Changes - Revenue increased by 15% year over year, with adjusted EBITDA up 19% [7][19] - Total accounts reached over 17 million, with HSA assets growing by 15% to over $31 billion [7][8] - Net income for Q1 was $53.9 million or $0.61 per share on a GAAP basis, while non-GAAP net income was $85.8 million or $0.97 per share [21][24] Business Line Data and Key Metrics Changes - Service revenue was a record $119.8 million, up 1% year over year, while custodial revenue grew 29% to a record $156.5 million [19][20] - HSA members who invest grew by 16% year over year, driving invested assets up 24% to $14.2 billion [8][20] - Interchange revenue increased by 14% to $54.6 million, reflecting higher member contributions and distributions [20] Market Data and Key Metrics Changes - The company serves nearly a quarter of all HSAs in the USA, indicating significant market share growth [9] - The proposed budget bill includes provisions that could expand HSA access to an additional 20 million families, potentially increasing the addressable market [16][17] Company Strategy and Development Direction - The company is focusing on optimizing plan design and employee engagement to help employers manage rising healthcare costs [9] - Investments in AI technology are being leveraged to enhance claims processing and member satisfaction while reducing costs [10][11] - The company aims to drive growth through existing client bases and new client acquisitions, particularly during uncertain economic times [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current enterprise pipeline and the potential for growth despite macroeconomic challenges [30][31] - The company is cautious about the overall macro impact on job creation and GDP growth, which may affect new account sales [31] - Management is confident in the effectiveness of their fraud prevention measures and expects to normalize service costs in the second half of the fiscal year [21][24] Other Important Information - The company has repurchased approximately $60 million of its outstanding shares during the quarter [22][24] - Enhanced rates on HSA cash are expected to stabilize at approximately 3.5% during fiscal year 2026 [24] Q&A Session Summary Question: What is the outlook on HSA selling conditions? - Management noted that new HSA sales were lower than last year but still higher than the previous fiscal year, expressing optimism about the current pipeline [28][30] Question: What is the duration of the locked-in rates? - The company has entered into forward treasury contracts for five-year treasury rates, locking in the base rate for upcoming maturities [32] Question: How much of the fraud costs are included in the guidance? - Management indicated that they are targeting a one basis point exit rate for fraud costs and have not changed their outlook based on the current quarter's performance [36][38] Question: Can you clarify the addressable market increase from the proposed legislation? - The net increase in the addressable market is estimated at 20 million, considering both Medicare Part A individuals and those on exchanges [40][41] Question: How is the company tracking app downloads and security measures? - The company has seen an increase in app downloads, with a focus on enhancing security through mobile authentication methods [44][46] Question: What is the impact of fraud on enterprise customer retention? - Management reported no negative impact from fraud on enterprise retention rates, which remain high [52] Question: How does the growth of custodial cash compare to HSA investment cash? - Investment cash is growing faster than custodial cash, with different member behaviors influencing these trends [76][78] Question: What is the status of the CHIP-enabled stacked card and related products? - The new stacked card has been rolled out for new members, with plans to integrate it into a digital wallet [107][108]

Financial Data and Key Metrics Changes - Revenue increased by 15% year over year, reaching $119.8 million for the first quarter [19] - Adjusted EBITDA rose by 19% to $140.2 million, with adjusted EBITDA as a percentage of revenue at 42% compared to 41% in the previous year [21] - Net income for the first quarter was $53.9 million or $0.61 per share on a GAAP basis, while non-GAAP net income was $85.8 million or $0.97 per share [21] - Custodial revenue grew by 29% to a record $156.5 million [20] - Fraud reimbursements decreased significantly from $11 million in Q4 to $3 million in Q1 [20][21] Business Line Data and Key Metrics Changes - Health Savings Accounts (HSAs) grew by 9%, with total accounts increasing by 7% [6] - Cash and Depository (CDB) accounts grew by 4%, with net CDB account growth of 260,000 year over year [6] - HSA assets increased by $4 billion year over year, totaling over $31 billion [6][7] - The number of HSA members who invest grew by 16%, driving invested assets up by 24% to $14.2 billion [7] Market Data and Key Metrics Changes - HealthEquity serves nearly a quarter of all HSAs in the USA, reflecting market share growth [8] - The average balances of HSA members grew by 6% this year [7] - The annualized yield on HSA cash was 3.5% for the quarter [20] Company Strategy and Development Direction - The company is focusing on expanding its Member First secure mobile experience and leveraging AI technology to enhance claims processing and member satisfaction [9][10] - HealthEquity is advocating for legislative changes to expand HSA access, particularly for working seniors eligible for Medicare [15][18] - The company aims to help employers reduce healthcare costs while empowering employees to build health security [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the enterprise pipeline and selling season despite softer macroeconomic conditions [7][30] - The company is cautious about the macro impact on job creation and slower GDP growth affecting new account sales [31] - Management believes that the proposed budget bill could significantly expand the addressable market for HSAs, potentially allowing 20 million more families access [16][18] Other Important Information - The company repurchased approximately $60 million of its outstanding shares during the quarter [22] - HealthEquity is committed to reducing fraud costs to one basis point of total HSA assets per year [21][26] Q&A Session Summary Question: What is the reason for the slowdown in HSA selling conditions? - Management noted that the current sales are lower than last year but still higher than two years ago, expressing optimism about the enterprise pipeline and the potential for growth despite macroeconomic challenges [30] Question: What is the duration of the locked-in rates from forward treasury contracts? - The company locked in rates for five-year treasury contracts to enhance rate migration [33] Question: How much of the fraud costs above the one basis point are included in the guidance? - Management indicated that they are not changing their outlook based on the current quarter's fraud costs, which were in line with expectations [39] Question: Can you clarify the net increase in the addressable market due to proposed legislation? - Management clarified that the net increase is 20 million, considering both Medicare Part A individuals and those on exchanges [42] Question: How is the company tracking towards app downloads and security measures? - The company reported 1.2 million app downloads and is focused on enhancing security through mobile authentication methods [49] Question: Has there been any fallout from elevated fraud levels on enterprise retention? - Management confirmed that there has been no fallout from fraud, with retention rates higher than in previous years [54] Question: Is the AI technology already impacting service costs? - Management stated that while they do not break out exact costs, AI is expected to help reduce service costs over time by automating interactions [100]