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HealthEquity Stock Gains as Q1 Earnings Beat Estimates, Revenues Up Y/Y
HQYHealthEquity(HQY) ZACKS·2025-06-04 17:31

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 330.8millioninthefiscalfirstquarter,surpassingtheZacksConsensusEstimateby3330.8 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 119.8million,up1.3119.8 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 54.6million,up14.454.6 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 83.1million,withtheoperatingmarginexpandingby1060basispointsto25.183.1 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 1.06billion,unchangedfromthepreviousquarter[14]−Netcashprovidedbyoperatingactivitieswas1.06 billion, unchanged from the previous quarter [14] - Net cash provided by operating activities was 64.7 million, slightly down from 65.4millionayearago[14]GuidanceandFutureOutlook−HealthEquityhasreiterateditsrevenueguidanceforfiscal2026,projectingrevenuesbetween65.4 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 1.305billion,withadjustedEPSexpectedintherangeof1.305 billion, with adjusted EPS expected in the range of 3.61-3.78[15]−Thecompanyadded150,000newHSAsduringthequarterandreportedasignificantreductioninfraud−relatedcosts,whichdroppedfrom3.78 [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]