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HealthEquity (HQY) Up 4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for HealthEquity (HQY - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HealthEquity due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
HealthEquity Surpasses Q2 Earnings Estimates, FY24 View Up
HealthEquity reported adjusted earnings per share of 53 cents in second-quarter fiscal 2024, which surpassed the Zacks Consensus Estimate by 12.8%. The bottom line improved 60.6% on a year-over-year basis.
GAAP earnings per share in the fiscal second quarter was 12 cents against the year-ago quarter’s loss of 13 cents.
Revenues in Detail
In the fiscal second quarter, the company generated revenues of $243.5 million, beating the Zacks Consensus Estimate by 1.9%. The top line improved 18.1% from the prior-year quarter.
HSA Details
As of Jul 31, 2023, the total number of HSA for which HealthEquity served as a non-bank custodian (HSA members) was 8.2 million, up 8.5% year over year.
HealthEquity reported 574,000 HSAs with investments as of Jul 31, 2023, up 11.2% year over year. Total Accounts, as of Jul 31, 2023, were 14.9 million, up 3.1% year over year. This uptick included total HSAs and 6.8 million other CDBs.
Total HSA assets were $23.20 billion at the end of Jul 31, 2023, up 12.9% year over year. This included $14.02 billion of HSA cash and $9.18 billion of HSA investments.
Client-held funds, which are deposits held on behalf of HealthEquity’s clients to facilitate the administration of its CDBs and from which the company generates custodial revenues, were $0.81 billion as of Jul 31, 2023.
Revenue Sources
HealthEquity derives revenues from three sources: Service revenues, Custodial revenues and Interchange revenues.
Service revenues totaled $105.7 million in the quarter, up 2.6% year over year.
Custodial revenues totaled $98.9 million, up 50.8% from the year-ago period.
Interchange revenues totaled $38.9 million, up 3.7% year over year.
Margin Details
In the quarter under review, HealthEquity’s gross profit rose 28.1% to $150.9 million. The gross margin expanded 482 basis points (bps) to 61.9%.
Sales and marketing expenses climbed 20.7% to $19.1 million year over year, whereas technology and development expenses climbed 17.6% to $54.8 million. General and administrative expenses also increased 4.4% year over year to $27.1 million. Adjusted operating expenses of $100.9 million increased 14.3%.
Adjusted operating profit totaled $49.9 million, improving 69.6% from the prior-year quarter. Adjusted operating margin in the quarter expanded 622 bps to 20.5%.
Financial Position
The company exited second-quarter fiscal 2024 with cash and cash equivalents of $290.3 million compared with $225.6 million at the fiscal first-quarter end. Total debt (net of issuance costs) at the end of second-quarter fiscal 2024 was $873.6 million compared with $872.9 million at the end of the fiscal first quarter.
Cumulative net cash flow from operating activities at the end of second-quarter fiscal 2024 totaled $108.6 million compared with $47.2 million in the year-ago period.
FY24 Guidance
HealthEquity has upped its revenue and earnings per share outlook for fiscal 2024.
For fiscal 2024, revenues are now projected to be between $980 million and $990 million, up from the earlier projections of $975 million and $985 million. The Zacks Consensus Estimate for the same is currently pegged at $979.7 million.
Adjusted earnings per share is now expected to be in the range of $1.97 to $2.06, up from the prior outlook of $1.88-$1.97. The Zacks Consensus Estimate for the same currently stands at $1.92.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 8.37% due to these changes.
VGM Scores
At this time, HealthEquity has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HealthEquity has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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HealthEquity (HQY) Up 4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for HealthEquity (HQY - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HealthEquity due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
HealthEquity Surpasses Q2 Earnings Estimates, FY24 View Up
HealthEquity reported adjusted earnings per share of 53 cents in second-quarter fiscal 2024, which surpassed the Zacks Consensus Estimate by 12.8%. The bottom line improved 60.6% on a year-over-year basis.
GAAP earnings per share in the fiscal second quarter was 12 cents against the year-ago quarter’s loss of 13 cents.
Revenues in Detail
In the fiscal second quarter, the company generated revenues of $243.5 million, beating the Zacks Consensus Estimate by 1.9%. The top line improved 18.1% from the prior-year quarter.
HSA Details
As of Jul 31, 2023, the total number of HSA for which HealthEquity served as a non-bank custodian (HSA members) was 8.2 million, up 8.5% year over year.
HealthEquity reported 574,000 HSAs with investments as of Jul 31, 2023, up 11.2% year over year. Total Accounts, as of Jul 31, 2023, were 14.9 million, up 3.1% year over year. This uptick included total HSAs and 6.8 million other CDBs.
Total HSA assets were $23.20 billion at the end of Jul 31, 2023, up 12.9% year over year. This included $14.02 billion of HSA cash and $9.18 billion of HSA investments.
Client-held funds, which are deposits held on behalf of HealthEquity’s clients to facilitate the administration of its CDBs and from which the company generates custodial revenues, were $0.81 billion as of Jul 31, 2023.
Revenue Sources
HealthEquity derives revenues from three sources: Service revenues, Custodial revenues and Interchange revenues.
Service revenues totaled $105.7 million in the quarter, up 2.6% year over year.
Custodial revenues totaled $98.9 million, up 50.8% from the year-ago period.
Interchange revenues totaled $38.9 million, up 3.7% year over year.
Margin Details
In the quarter under review, HealthEquity’s gross profit rose 28.1% to $150.9 million. The gross margin expanded 482 basis points (bps) to 61.9%.
Sales and marketing expenses climbed 20.7% to $19.1 million year over year, whereas technology and development expenses climbed 17.6% to $54.8 million. General and administrative expenses also increased 4.4% year over year to $27.1 million. Adjusted operating expenses of $100.9 million increased 14.3%.
Adjusted operating profit totaled $49.9 million, improving 69.6% from the prior-year quarter. Adjusted operating margin in the quarter expanded 622 bps to 20.5%.
Financial Position
The company exited second-quarter fiscal 2024 with cash and cash equivalents of $290.3 million compared with $225.6 million at the fiscal first-quarter end. Total debt (net of issuance costs) at the end of second-quarter fiscal 2024 was $873.6 million compared with $872.9 million at the end of the fiscal first quarter.
Cumulative net cash flow from operating activities at the end of second-quarter fiscal 2024 totaled $108.6 million compared with $47.2 million in the year-ago period.
FY24 Guidance
HealthEquity has upped its revenue and earnings per share outlook for fiscal 2024.
For fiscal 2024, revenues are now projected to be between $980 million and $990 million, up from the earlier projections of $975 million and $985 million. The Zacks Consensus Estimate for the same is currently pegged at $979.7 million.
Adjusted earnings per share is now expected to be in the range of $1.97 to $2.06, up from the prior outlook of $1.88-$1.97. The Zacks Consensus Estimate for the same currently stands at $1.92.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 8.37% due to these changes.
VGM Scores
At this time, HealthEquity has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HealthEquity has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.