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.
Reasons to Hold HealthEquity Stock in Your Portfolio for Now
Read MoreHide Full Article
Key Takeaways
HQY benefits from solid Q4 results and expanding HSAs, including rising HSA assets and investment accounts.
HQY advances AI tools like claims adjudication and Agentic AI to speed service and boost satisfaction.
HQY faces ongoing data security risks, including $0.3M in fraud reimbursements in the quarter.
HealthEquity, Inc. (HQY - Free Report) has been gaining from its business model and strategy. The optimism, led by a solid fourth-quarter fiscal 2026 performance and strength in Health Savings Accounts (HSAs), is expected to contribute further. However, data security threats are major concerns.
In the year-to-date period, the Zacks Rank #3 (Hold) company’s shares have lost 10.3% compared with the 10.2% decline of the industry. The S&P 500 has increased 8.8% during the said time frame.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $6.8 billion. The company projects 14.3% growth over the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 14.03%.
Image Source: Zacks Investment Research
Reasons Favoring HQY’s Growth
AI & Digital Innovation Drive Scalable Efficiency: In fourth-quarter fiscal 2026, HealthEquity further advanced its AI and digital innovation strategy, with management now framing AI as an active driver of operating leverage rather than a forward-looking initiative. The company highlighted that AI-enabled tools, including expedited claims processing, intelligent self-service solutions and evolving agentic support capabilities, are already reducing reliance on phone-based interactions, lowering service costs and improving resolution speed. These efficiencies contributed to a $17 million year-over-year decline in service costs and supported more than 700 basis points of gross margin expansion, demonstrating that automation and digital workflows are translating into tangible financial benefits.
Expansion of Health Savings Accounts: HealthEquity has experienced significant growth in its HSA offerings. As of Jan. 31, 2026, the total number of Health Savings Accounts (HSAs) for which HealthEquity served as a non-bank custodian was 10.6 million, up 7% year over year.
HealthEquity reported 832,000 HSAs with investments as of Jan. 31, 2026, up 10% year over year. Total accounts, as of Jan. 31, 2026, were 17.8 million. This uptick included total HSAs and 7.2 million Consumer Direct Benefits (CDBs).
Total HSA assets were $36.5 billion at the end of Jan. 31, 2026, up 14% year over year. This included $18 billion of HSA cash and $18.5 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 $1.1 billion as of Jan. 31, 2026.
Strong Q4 Results: HealthEquity exited fourth-quarter fiscal 2026 results on a strong note, with both earnings and revenues surpassing expectations. The company benefited from solid growth in health savings accounts (HSAs), which continued to drive top-line expansion, while a sharp increase in total HSA assets remained encouraging.
Margin performance was another highlight, with meaningful improvements in both gross and operating margins reflecting operating leverage and disciplined cost management. HealthEquity also demonstrated robust account growth momentum, adding a record 550,000 HSAs in the fiscal fourth quarter and more than 1 million new HSAs during fiscal 2026, taking total accounts to 17.8 million.
Management attributed the strong growth to solid execution in new sales, retention rates above 98% and continued adoption of HSA-qualified health plans, which collectively position the company well for sustained growth.
A Factor That May Offset HQY’s Gains
Data Security Threats: HealthEquity manages highly sensitive personal data and more than $34 billion of client HSA assets, making platform security a persistent operational risk. While fraud reimbursements declined to approximately $0.3 million in the fiscal third quarter of 2026, management continues to invest heavily in fraud prevention and security controls, underscoring that the threat remains structural rather than eliminated. Any material security breach could result in the loss of funds or sensitive data, litigation, regulatory scrutiny and reputational damage, potentially disrupting operations, pressuring margins and eroding client and member confidence.
Estimate Trend
HealthEquity has been witnessing a stable estimate revision trend for fiscal 2027. Over the past 30 days, the Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $4.60.
The Zacks Consensus Estimate for first-quarter fiscal 2027 revenues is pegged at $354.4 million, implying a 7.1% rise from the year-ago reported number. The consensus mark for fiscal first-quarter EPS is pinned at $1.11, implying a 14.4% improvement year over year.
Key Picks
Some better-ranked stocks in the broader medical space that have announced quarterly results are West Pharmaceutical Services, Inc. (WST - Free Report) , Intuitive Surgical (ISRG - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
West Pharmaceutical reported first-quarter 2026 EPS of $2.13, which beat the Zacks Consensus Estimate by 26.8%. Revenues of $844.9 million surpassed the Zacks Consensus Estimate by 8.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical has a long-term estimated growth rate of 13.9%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.37%.
Intuitive Surgical reported first-quarter 2026 adjusted EPS of $2.50, which beat the Zacks Consensus Estimate by 20.19%. Revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 6.2%. It currently carries a Zacks Rank of 2 (Buy).
Intuitive Surgical has a long-term estimated growth rate of 14.9%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.82%.
Cardinal Health, carrying a Zacks Rank of 2 at present, reported third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.
Cardinal Health has a long-term estimated growth rate of 15.6%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Reasons to Hold HealthEquity Stock in Your Portfolio for Now
Key Takeaways
HealthEquity, Inc. (HQY - Free Report) has been gaining from its business model and strategy. The optimism, led by a solid fourth-quarter fiscal 2026 performance and strength in Health Savings Accounts (HSAs), is expected to contribute further. However, data security threats are major concerns.
In the year-to-date period, the Zacks Rank #3 (Hold) company’s shares have lost 10.3% compared with the 10.2% decline of the industry. The S&P 500 has increased 8.8% during the said time frame.
The renowned provider of technology-enabled services platforms for healthcare savings and spending decisions has a market capitalization of $6.8 billion. The company projects 14.3% growth over the next five years and expects to witness continued improvements in its business. HealthEquity’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 14.03%.
Image Source: Zacks Investment Research
Reasons Favoring HQY’s Growth
AI & Digital Innovation Drive Scalable Efficiency: In fourth-quarter fiscal 2026, HealthEquity further advanced its AI and digital innovation strategy, with management now framing AI as an active driver of operating leverage rather than a forward-looking initiative. The company highlighted that AI-enabled tools, including expedited claims processing, intelligent self-service solutions and evolving agentic support capabilities, are already reducing reliance on phone-based interactions, lowering service costs and improving resolution speed. These efficiencies contributed to a $17 million year-over-year decline in service costs and supported more than 700 basis points of gross margin expansion, demonstrating that automation and digital workflows are translating into tangible financial benefits.
Expansion of Health Savings Accounts: HealthEquity has experienced significant growth in its HSA offerings. As of Jan. 31, 2026, the total number of Health Savings Accounts (HSAs) for which HealthEquity served as a non-bank custodian was 10.6 million, up 7% year over year.
HealthEquity reported 832,000 HSAs with investments as of Jan. 31, 2026, up 10% year over year. Total accounts, as of Jan. 31, 2026, were 17.8 million. This uptick included total HSAs and 7.2 million Consumer Direct Benefits (CDBs).
Total HSA assets were $36.5 billion at the end of Jan. 31, 2026, up 14% year over year. This included $18 billion of HSA cash and $18.5 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 $1.1 billion as of Jan. 31, 2026.
Strong Q4 Results: HealthEquity exited fourth-quarter fiscal 2026 results on a strong note, with both earnings and revenues surpassing expectations. The company benefited from solid growth in health savings accounts (HSAs), which continued to drive top-line expansion, while a sharp increase in total HSA assets remained encouraging.
Margin performance was another highlight, with meaningful improvements in both gross and operating margins reflecting operating leverage and disciplined cost management. HealthEquity also demonstrated robust account growth momentum, adding a record 550,000 HSAs in the fiscal fourth quarter and more than 1 million new HSAs during fiscal 2026, taking total accounts to 17.8 million.
Management attributed the strong growth to solid execution in new sales, retention rates above 98% and continued adoption of HSA-qualified health plans, which collectively position the company well for sustained growth.
A Factor That May Offset HQY’s Gains
Data Security Threats: HealthEquity manages highly sensitive personal data and more than $34 billion of client HSA assets, making platform security a persistent operational risk. While fraud reimbursements declined to approximately $0.3 million in the fiscal third quarter of 2026, management continues to invest heavily in fraud prevention and security controls, underscoring that the threat remains structural rather than eliminated. Any material security breach could result in the loss of funds or sensitive data, litigation, regulatory scrutiny and reputational damage, potentially disrupting operations, pressuring margins and eroding client and member confidence.
Estimate Trend
HealthEquity has been witnessing a stable estimate revision trend for fiscal 2027. Over the past 30 days, the Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $4.60.
The Zacks Consensus Estimate for first-quarter fiscal 2027 revenues is pegged at $354.4 million, implying a 7.1% rise from the year-ago reported number. The consensus mark for fiscal first-quarter EPS is pinned at $1.11, implying a 14.4% improvement year over year.
Key Picks
Some better-ranked stocks in the broader medical space that have announced quarterly results are West Pharmaceutical Services, Inc. (WST - Free Report) , Intuitive Surgical (ISRG - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
West Pharmaceutical reported first-quarter 2026 EPS of $2.13, which beat the Zacks Consensus Estimate by 26.8%. Revenues of $844.9 million surpassed the Zacks Consensus Estimate by 8.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical has a long-term estimated growth rate of 13.9%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.37%.
Intuitive Surgical reported first-quarter 2026 adjusted EPS of $2.50, which beat the Zacks Consensus Estimate by 20.19%. Revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 6.2%. It currently carries a Zacks Rank of 2 (Buy).
Intuitive Surgical has a long-term estimated growth rate of 14.9%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.82%.
Cardinal Health, carrying a Zacks Rank of 2 at present, reported third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.
Cardinal Health has a long-term estimated growth rate of 15.6%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%.