We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
HealthEquity (HQY) to Add Conduent's HSA Accounts in 2024
Read MoreHide Full Article
HealthEquity, Inc. (HQY - Free Report) signed a definitive agreement with Conduent Incorporated (CNDT - Free Report) for transfer of the latter’s Heath Savings Account (HSA) portfolio.
As a part of the deal, Conduent will transfer approximately 665,000 customer accounts under its BenefitWallet digital platform to HealthEquity. Its customers have approximately $2.7 billion in HSA assets.
HealthEquity will likely have to pay a purchase price of $425 million, per the agreement. The deal, which is subject to regulatory approvals, is likely to completed in tranches during the first half of 2024. The deal represents an encouraging potential to boost HealthEquity’s HSA accounts and HSA assets by more than 8% and 11%, respectively.
Price Performance
Shares of HealthEquity have risen 19.5% year to date against the industry’s 11.6% decline. The S&P 500 has witnessed 13.7% growth in the said time frame.
Image Source: Zacks Investment Research
Significance of the Deal
HealthEquity is the nation’s largest HSA administrator with more than 8.2 million HSA accounts as of Jun 30, 2023. The total assets of its HSA accounts are worth approximately $23.2 billion for the same time period. As of December 2022, the company had a market share of 20% in the HSA category.
HQY derives revenues primarily from the services that it provides to make beneficial healthcare savings and spending decisions. The company also charges fees from customers for helping them grow their HSA assets through investments in mutual funds. It also receives custodial revenues from HSA assets held by its depository partners.
The deal with Conduent implies a significant boost to service revenues with an increase in the number of customer accounts. Moreover, Conduent’s HSA assets should lead to higher fees and custodial revenues.
Any financial impact of the deal will likely start to reflect in 2024, especially in the second half of the year.
Moreover, the addition of Conduent’s portfolio will reflect HQY’s focus on building its HSA business. The company has increased its market share from 4% to 20% in the last 12 years, which should further increase following the completion of the deal with Conduent. This builds confidence in long-term prospects of the company. Moreover, its revenues have gained more than 20% since February 2020, amid the pandemic, which reflects its resiliency. The company also manages other consumer-directed benefits from employers that is also supporting its growth.
Notable Developments
Earlier this month, HealthEquity reported better-than-expected second-quarter fiscal 2024 results. The company witnessed solid top and bottom-line performances in the reported quarter. The top line benefited from robust contributions from all its revenue sources. Solid growth in HSAs also bolstered the top line. The solid uptick in total HSA assets in the reported quarter is promising. The expansion of both margins also bodes well. The company’s risen revenue and adjusted EPS outlook for the fiscal year raises our optimism.
However, continued inflationary pressure leading to higher wage inflation issues does not bode well.
On its second quarter earnings call, HealthEquity raised its revenues guidance by 0.5% and earnings guidance by 4.7% at the midpoint of the guided range for fiscal 2024. The company projects revenues in the range of $980-$990 million. Adjusted EPS is now expected in the band of $1.97-$2.06.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 41.6% year to date compared with the industry’s 10.5% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has rallied 16.9% year to date compared with the industry’s 10.5% growth.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
HealthEquity (HQY) to Add Conduent's HSA Accounts in 2024
HealthEquity, Inc. (HQY - Free Report) signed a definitive agreement with Conduent Incorporated (CNDT - Free Report) for transfer of the latter’s Heath Savings Account (HSA) portfolio.
As a part of the deal, Conduent will transfer approximately 665,000 customer accounts under its BenefitWallet digital platform to HealthEquity. Its customers have approximately $2.7 billion in HSA assets.
HealthEquity will likely have to pay a purchase price of $425 million, per the agreement. The deal, which is subject to regulatory approvals, is likely to completed in tranches during the first half of 2024. The deal represents an encouraging potential to boost HealthEquity’s HSA accounts and HSA assets by more than 8% and 11%, respectively.
Price Performance
Shares of HealthEquity have risen 19.5% year to date against the industry’s 11.6% decline. The S&P 500 has witnessed 13.7% growth in the said time frame.
Image Source: Zacks Investment Research
Significance of the Deal
HealthEquity is the nation’s largest HSA administrator with more than 8.2 million HSA accounts as of Jun 30, 2023. The total assets of its HSA accounts are worth approximately $23.2 billion for the same time period. As of December 2022, the company had a market share of 20% in the HSA category.
HQY derives revenues primarily from the services that it provides to make beneficial healthcare savings and spending decisions. The company also charges fees from customers for helping them grow their HSA assets through investments in mutual funds. It also receives custodial revenues from HSA assets held by its depository partners.
The deal with Conduent implies a significant boost to service revenues with an increase in the number of customer accounts. Moreover, Conduent’s HSA assets should lead to higher fees and custodial revenues.
Any financial impact of the deal will likely start to reflect in 2024, especially in the second half of the year.
Moreover, the addition of Conduent’s portfolio will reflect HQY’s focus on building its HSA business. The company has increased its market share from 4% to 20% in the last 12 years, which should further increase following the completion of the deal with Conduent. This builds confidence in long-term prospects of the company. Moreover, its revenues have gained more than 20% since February 2020, amid the pandemic, which reflects its resiliency. The company also manages other consumer-directed benefits from employers that is also supporting its growth.
Notable Developments
Earlier this month, HealthEquity reported better-than-expected second-quarter fiscal 2024 results. The company witnessed solid top and bottom-line performances in the reported quarter. The top line benefited from robust contributions from all its revenue sources. Solid growth in HSAs also bolstered the top line. The solid uptick in total HSA assets in the reported quarter is promising. The expansion of both margins also bodes well. The company’s risen revenue and adjusted EPS outlook for the fiscal year raises our optimism.
However, continued inflationary pressure leading to higher wage inflation issues does not bode well.
On its second quarter earnings call, HealthEquity raised its revenues guidance by 0.5% and earnings guidance by 4.7% at the midpoint of the guided range for fiscal 2024. The company projects revenues in the range of $980-$990 million. Adjusted EPS is now expected in the band of $1.97-$2.06.
HealthEquity, Inc. Price
HealthEquity, Inc. price | HealthEquity, Inc. Quote
Zacks Rank & Stocks to Consider
HealthEquity currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) and McKesson Corporation (MCK - Free Report) .
Align Technology, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 41.6% year to date compared with the industry’s 10.5% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has rallied 16.9% year to date compared with the industry’s 10.5% growth.