We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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.
HQY Stock Falls as Q4 Earnings Miss Estimates, Revenues Up Y/Y
Read MoreHide Full Article
HealthEquity, Inc. (HQY - Free Report) reported adjusted earnings per share (EPS) of 69 cents for fourth-quarter fiscal 2025, missing the Zacks Consensus Estimate by 2.82%. However, the bottom line improved 9.5% on a year-over-year basis.
GAAP EPS in the fiscal fourth quarter was 30 cents, flat compared with the year-ago quarter’s EPS.
Shares of HQY were down 13.6% in after-market trading following the earnings call.
HealthEquity Revenues in Detail
In the fiscal fourth quarter, the company generated revenues of $311.8 million, which beat the Zacks Consensus Estimate by 2.2%. The top line improved 18.8% from the prior-year quarter.
HSA Details of HQY
As of Jan. 31, 2025, the total number of Health Savings Accounts (HSAs) for which HealthEquity served as a non-bank custodian was 9.9 million, up 14% year over year.
HealthEquity reported 753,000 HSAs with investments as of Jan. 31, 2025, up 23% year over year. Total accounts, as of Jan. 31,2025, were 17 million, up 8.2% year over year. This uptick included total HSAs and 7.1 million Consumer Direct Benefits (CDBs), flat year over year.
Total HSA assets were $32.1 billion at the end of Jan. 31, 2025, up 27% year over year. This included $17.4 billion of HSA cash (up 16% year over year) and $14.7 billion of HSA investments (up 44.1% year over year). This figure compares to our fiscal fourth-quarter HSA cash and HSA investments projection of $17 billion and $14.5 billion, respectively. We had projected total HSA assets of $31.5 billion for the fiscal fourth quarter.
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 $0.9 billion as of Jan. 31, 2025.
Revenue Sources of HealthEquity
HealthEquity derives revenues from three sources: Service revenues, Custodial revenues, and Interchange revenues.
Service revenues totaled $124.2 million in the quarter, up 4.6% year over year. This reflected a higher number of HSAs and invested HSA Assets. This figure compares favorably with our fourth-quarter projection of $119.9 million.
Custodial revenues totaled $144.1 million, up 36.7% from the year-ago period. Our projection for the fiscal fourth-quarter Custodial revenues was $140.1 million.
Interchange revenues totaled $43.5 million, up 13.3% year over year. This figure compares favorably with our fiscal fourth-quarter projection of $41.6 million.
HQY Margin Details
In the quarter under review, HealthEquity’s gross profit rose 15.6% to $189 million. However, the gross margin contracted 160 basis points (bps) to 60.6%. We had projected the gross margin to be 59.8% in the fiscal fourth quarter.
Sales and marketing expenses rose 12.3% to $23.1 million year over year, whereas technology and development expenses climbed 17% year over year to $64.7 million. General and administrative expenses also increased 29.5% year over year to $29.9 million. Total operating expenses of $146.9 million increased 18% year over year.
Operating profit totaled $42.2 million, improving 8.4% from the prior-year quarter. However, the operating margin in the quarter contracted 130 bps to 13.5% compared with the prior-year quarter.
HealthEquity, Inc. Price, Consensus and EPS Surprise
The company exited the fourth quarter of fiscal 2025 with cash and cash equivalents of $295.9 million compared with $322.2 million at the end of the fourth quarter of fiscal 2024. Total debt (net of issuance costs) at the end of fourth-quarter fiscal 2025 was $1.06 billion compared with $1.08 billion at the end of fourth-quarter fiscal 2024.
Cumulative net cash provided by operating activities at the end of fourth-quarter fiscal 2025 totaled $339.9 million compared with $242.8 million a year ago.
HealthEquity FY26 Guidance
HealthEquity has provided its revenue and EPS projections for fiscal 2026.
For fiscal 2026, revenues are projected to be between $1.28 billion and $1.30 billion. The Zacks Consensus Estimate is currently pegged at $1.30 billion.
Adjusted EPS is expected to be in the range of $3.57-$3.74. The Zacks Consensus Estimate currently stands at $3.72.
Our Take on HQY
HealthEquity exited fourth-quarter fiscal 2025 with mixed results. The company witnessed solid top-line and bottom-line performances in the reported quarter. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter is promising.
Despite inflationary challenges, HealthEquity has experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets. The growing number of members choosing to invest in HSAs reflects a positive trend. Additionally, more members are opting for enhanced rates on HSA cash, resulting in improved and more consistent custodial yields.
However, a significant rise in operating expenses leading to a decline in operating margin raises concerns.
Zacks Rank & Key Picks
Currently, HealthEquity carries a Zacks Rank #3 (Hold).
Masimo’s shares have rallied 30.1% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.
Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.
Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have gained 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
HQY Stock Falls as Q4 Earnings Miss Estimates, Revenues Up Y/Y
HealthEquity, Inc. (HQY - Free Report) reported adjusted earnings per share (EPS) of 69 cents for fourth-quarter fiscal 2025, missing the Zacks Consensus Estimate by 2.82%. However, the bottom line improved 9.5% on a year-over-year basis.
GAAP EPS in the fiscal fourth quarter was 30 cents, flat compared with the year-ago quarter’s EPS.
Shares of HQY were down 13.6% in after-market trading following the earnings call.
HealthEquity Revenues in Detail
In the fiscal fourth quarter, the company generated revenues of $311.8 million, which beat the Zacks Consensus Estimate by 2.2%. The top line improved 18.8% from the prior-year quarter.
HSA Details of HQY
As of Jan. 31, 2025, the total number of Health Savings Accounts (HSAs) for which HealthEquity served as a non-bank custodian was 9.9 million, up 14% year over year.
HealthEquity reported 753,000 HSAs with investments as of Jan. 31, 2025, up 23% year over year. Total accounts, as of Jan. 31,2025, were 17 million, up 8.2% year over year. This uptick included total HSAs and 7.1 million Consumer Direct Benefits (CDBs), flat year over year.
Total HSA assets were $32.1 billion at the end of Jan. 31, 2025, up 27% year over year. This included $17.4 billion of HSA cash (up 16% year over year) and $14.7 billion of HSA investments (up 44.1% year over year). This figure compares to our fiscal fourth-quarter HSA cash and HSA investments projection of $17 billion and $14.5 billion, respectively. We had projected total HSA assets of $31.5 billion for the fiscal fourth quarter.
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 $0.9 billion as of Jan. 31, 2025.
Revenue Sources of HealthEquity
HealthEquity derives revenues from three sources: Service revenues, Custodial revenues, and Interchange revenues.
Service revenues totaled $124.2 million in the quarter, up 4.6% year over year. This reflected a higher number of HSAs and invested HSA Assets. This figure compares favorably with our fourth-quarter projection of $119.9 million.
Custodial revenues totaled $144.1 million, up 36.7% from the year-ago period. Our projection for the fiscal fourth-quarter Custodial revenues was $140.1 million.
Interchange revenues totaled $43.5 million, up 13.3% year over year. This figure compares favorably with our fiscal fourth-quarter projection of $41.6 million.
HQY Margin Details
In the quarter under review, HealthEquity’s gross profit rose 15.6% to $189 million. However, the gross margin contracted 160 basis points (bps) to 60.6%. We had projected the gross margin to be 59.8% in the fiscal fourth quarter.
Sales and marketing expenses rose 12.3% to $23.1 million year over year, whereas technology and development expenses climbed 17% year over year to $64.7 million. General and administrative expenses also increased 29.5% year over year to $29.9 million. Total operating expenses of $146.9 million increased 18% year over year.
Operating profit totaled $42.2 million, improving 8.4% from the prior-year quarter. However, the operating margin in the quarter contracted 130 bps to 13.5% compared with the prior-year quarter.
HealthEquity, Inc. Price, Consensus and EPS Surprise
HealthEquity, Inc. price-consensus-eps-surprise-chart | HealthEquity, Inc. Quote
Financial Position of HQY
The company exited the fourth quarter of fiscal 2025 with cash and cash equivalents of $295.9 million compared with $322.2 million at the end of the fourth quarter of fiscal 2024. Total debt (net of issuance costs) at the end of fourth-quarter fiscal 2025 was $1.06 billion compared with $1.08 billion at the end of fourth-quarter fiscal 2024.
Cumulative net cash provided by operating activities at the end of fourth-quarter fiscal 2025 totaled $339.9 million compared with $242.8 million a year ago.
HealthEquity FY26 Guidance
HealthEquity has provided its revenue and EPS projections for fiscal 2026.
For fiscal 2026, revenues are projected to be between $1.28 billion and $1.30 billion. The Zacks Consensus Estimate is currently pegged at $1.30 billion.
Adjusted EPS is expected to be in the range of $3.57-$3.74. The Zacks Consensus Estimate currently stands at $3.72.
Our Take on HQY
HealthEquity exited fourth-quarter fiscal 2025 with mixed results. The company witnessed solid top-line and bottom-line performances in the reported quarter. Solid growth in HSAs also drove the top line. The solid uptick in total HSA assets in the reported quarter is promising.
Despite inflationary challenges, HealthEquity has experienced solid growth in HSA balances, driven by a significant increase in invested assets, which now represent a larger portion of total HSA assets. The growing number of members choosing to invest in HSAs reflects a positive trend. Additionally, more members are opting for enhanced rates on HSA cash, resulting in improved and more consistent custodial yields.
However, a significant rise in operating expenses leading to a decline in operating margin raises concerns.
Zacks Rank & Key Picks
Currently, HealthEquity carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Masimo (MASI - Free Report) , Boston Scientific (BSX - Free Report) and Cardinal Health (CAH - Free Report) . At present, Masimo sports a Zacks Rank #1 (Strong Buy), whereas Boston Scientific and Cardinal Health carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s shares have rallied 30.1% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.
Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.
Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have gained 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.