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HealthEquity (HQY) Q4 Earnings, Revenues Beat Estimates

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HealthEquity, Inc. (HQY - Free Report) reported adjusted earnings per share (EPS) of 42 cents for fourth-quarter fiscal 2021, which beat the Zacks Consensus Estimate of 41 cents by 2.4%. Also, the bottom line grew 5% on a year-over-year basis.

For fiscal 2021, adjusted EPS came in at $1.67, in line with the Zacks Consensus Estimate. However, the bottom line dipped 0.6% on a year-over-year basis.

Revenues in Detail

For the fiscal fourth quarter, the company generated revenues of $188.2 million, outpacing the Zacks Consensus Estimate by 1.4%. However, the top line fell 6.4% from the prior-year quarter.

For fiscal 2021, revenues summed $733.6 million, outpacing the Zacks Consensus Estimate by 0.4%. Also the figure grew 37.9% year over year.

HSA Details

As of Jan 31, 2021, the total number of Health Savings Accounts (HSA) for which HealthEquity served as a non-bank custodian (HSA members), came in at 5.8 million, up 8% year over year.

Additionally, total Active HSA assets were $14.3 billion, up 24% year over year. Total HSA Accounts as of Jan 31, 2021 were 12.8 million including 7 million  Consumer Direct Benefits (CDB).

Segmental Performance

Service Revenues: Revenues of $111.3 million were down 8.9% from the year-ago figure.

Custodial Revenues: Revenues slid 1.6% year over year to $48.6 million.

Interchange Revenues: Revenues fell 4.7% year over year to $28.3 million.

Margin Details

HealthEquity generated gross profit of $100.9 million, down 11.2% from the year-ago quarter. Gross margin was 53.6% of net revenues, down 287 basis points (bps) year over year.

Adjusted operating profit in the fiscal fourth quarter was $32.2 million, down 28.1% year over year. Adjusted operating margin was 17.1% in the period, contracting 517 bps year over year.

HealthEquity, Inc. Price, Consensus and EPS Surprise

HealthEquity, Inc. Price, Consensus and EPS Surprise

 

HealthEquity, Inc. price-consensus-eps-surprise-chart | HealthEquity, Inc. Quote

 

Financial Position

The company exited the fiscal fourth quarter with cash and cash equivalents of $328.8 million compared with $191.7 million at the end of the year-ago period.

Cumulative cash flow from operating activities in the quarter totaled $181.6 million, up from $105 million in the year-ago period.

Full-Fiscal View

For fiscal 2022, revenues are projected within $750-$760 million. The Zacks Consensus Estimate for the same is pegged at $753.6 million.

Adjusted earnings per share are expected within $1.37-$1.42. The Zacks Consensus Estimate for the same stands at $1.69.

Summing Up

HealthEquity exited fourth-quarter fiscal 2021 on a strong note. Notably, solid growth in HSAs and custodial assets bolstered the top line. In addition to HSA, the company offers health reimbursement arrangement to regional employers.HealthEquity continued to benefit from the acquisition of WageWorks, which was completed in August 2019.

However, the company witnessed a weak segmental performance in the quarter under review. A significant drop in adjusted operating and gross margin raises a concern. The company also faces stiff competition in the Medical Services market. HealthEquity is required to comply with the strict treasury regulations formulated by the Internal Revenue Service (IRS).

Zacks Rank and Key Picks

HealthEquity currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space that already announced quarterly results are Hologic, Inc. (HOLX - Free Report) , Abbott Laboratories (ABT - Free Report) and Hill-Rom Holdings, Inc. (HRC - Free Report) , each presently carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Further, fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

Hill-Rom reported first-quarter fiscal 2021 adjusted EPS of $1.53, beating the Zacks Consensus Estimate by 45.7%. Revenues of $741.1 million surpassed the consensus mark by 13.2%.

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