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1. Company Snapshot

1.a. Company Description

HealthEquity, Inc.provides technology-enabled services platforms to consumers and employers in the United States.The company offers cloud-based platforms for individuals to make health saving and spending decisions, pay healthcare bills, compare treatment options and prices, receive personalized benefit and clinical information, earn wellness incentives, grow their savings, and make investment choices; and health savings accounts.


It also provides mutual fund investment platform; and online-only automated investment advisory services through Advisor, a Web-based tool.In addition, the company offers flexible spending accounts; health reimbursement arrangements; and Consolidated Omnibus Budget Reconciliation Act continuation services, as well as administers pre-tax commuter benefit programs.It serves clients through a direct sales force; benefits brokers and advisors; and a network of health plans, benefits administrators, benefits brokers and consultants, and retirement plan record-keepers.


The company was incorporated in 2002 and is headquartered in Draper, Utah.

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1.b. Last Insights on HQY

HealthEquity's recent performance was driven by strong Q2 earnings, with EPS growth of 25.6% year-over-year and revenue growth of 8.6%. The company's HSA growth, with a 12% increase, also contributed positively. Additionally, the company's asset-linked revenue model and high margins have drawn investors' attention. HealthEquity's recent appointments to its executive leadership team are expected to drive growth and innovation. Furthermore, the company's deployment of agentic AI capabilities aims to elevate member support experience. (Source: Globe Newswire, Jefferies LLC)

1.c. Company Highlights

2. HealthEquity's Strong Q2 FY2026 Results Driven by HSA Growth and Margin Expansion

HealthEquity's second quarter fiscal 2026 results demonstrated robust financial performance, with revenue increasing 9% to $656.7 million, driven by a 15% surge in custodial revenue to a record $159.9 million. Gross profit reached a record 71% of revenue, driven by lower service costs and a net release of fraud reserves. Net income was $59.9 million GAAP and $94.6 million non-GAAP, with adjusted EBITDA growing 18% to $151.1 million, resulting in an adjusted EBITDA margin of 46%, near an all-time high. Earnings per share (EPS) came in at $1.08, beating estimates of $0.92.

Publication Date: Sep -03

📋 Highlights
  • Revenue Growth:: Revenue increased 9% to $656.7 million, with custodial revenue surging 15% to $159.9 million.
  • Gross Profit Margin:: Gross profit reached 71% of revenue, a record, driven by lower service costs and fraud reserve releases.
  • Adjusted EBITDA:: Grew 18% to $151.1 million, achieving a 46% margin, near an all-time high.
  • HSA Asset Expansion:: HSA assets rose 12% to $33 billion, with legislative changes enabling 3–4 million additional HSA-eligible families.
  • Mobile Adoption:: The secure mobile app achieved 1.7 million downloads, enhancing user engagement and digital access.

Key Drivers of Growth

The growth in HSAs is attributed to the company's focus on serving customers well, improving product experience, and leveraging technology, with HSAs growing 6% and HSA assets increasing 12% to $33 billion. Invested assets climbed 23% to $16.1 billion, driven by the company's efforts to increase adoption through marketing and plan partnerships.

Legislative Wins and Market Opportunities

The recent budget bill passed in July significantly expanded HSA eligibility, allowing direct primary care arrangements and low-cost telehealth before deductibles, and making bronze and catastrophic plans eligible for HSAs starting in 2026. This could enable 3 to 4 million more families to access HSAs, providing a significant market opportunity for HealthEquity.

Valuation and Outlook

With a P/E Ratio of 56.7, P/B Ratio of 3.85, and EV/EBITDA of 19.74, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 9.3%. The company's focus on improving the member experience, investing in technology, and expanding HSA eligibility positions it for continued growth.

Investment Strategy and Risk Management

The company plans to repurchase shares and reduce revolver borrowings, while maintaining ample capacity for acquisitions. HealthEquity is also hedging its rate exposure and expects to benefit from rising healthcare costs driving HSA adoption.

3. NewsRoom

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HealthEquity Stock Gains as Q3 Earnings Beat Estimates, Revenues Up Y/Y

Dec -04

Source: zacks.com

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HealthEquity, Inc. (HQY) Q3 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

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HealthEquity (HQY) Q3 Earnings: How Key Metrics Compare to Wall Street Estimates

Dec -04

Source: zacks.com

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HealthEquity (HQY) Tops Q3 Earnings and Revenue Estimates

Dec -03

Source: zacks.com

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HealthEquity Reports Third Quarter Ended October 31, 2025 Financial Results

Dec -03

Source: globenewswire.com

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HealthEquity: Flywheel Keeps Spinning

Dec -02

Source: seekingalpha.com

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HealthEquity, Inc. $HQY Shares Sold by Advantage Alpha Capital Partners LP

Nov -28

Source: defenseworld.net

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Exploring Analyst Estimates for HealthEquity (HQY) Q3 Earnings, Beyond Revenue and EPS

Nov -27

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.95%)

6. Segments

Service

Expected Growth: 11.7%

HealthEquity's 11.7% growth is driven by increasing adoption of consumer-directed healthcare accounts, expansion of existing client relationships, and strategic acquisitions. Additionally, the company's investments in technology and customer service have improved user experience, leading to higher retention rates and cross-selling opportunities.

Custodial

Expected Growth: 10.47%

HealthEquity's Custodial segment growth of 10.47% is driven by increasing adoption of Health Savings Accounts (HSAs), rising healthcare costs, and growing demand for consumer-directed healthcare solutions. Additionally, strategic partnerships, expanded product offerings, and effective marketing efforts contribute to the segment's growth.

Interchange

Expected Growth: 9.98%

HealthEquity's 9.98% growth is driven by increasing adoption of Health Savings Accounts (HSAs), expansion into new markets, and strategic partnerships. Additionally, the company's focus on providing a comprehensive platform for consumers to manage their healthcare expenses, coupled with its strong brand recognition, has contributed to its growth momentum.

7. Detailed Products

Health Savings Accounts (HSAs)

A tax-advantaged savings account that allows individuals to set aside funds on a tax-free basis to pay for qualified medical expenses.

Flexible Spending Accounts (FSAs)

A tax-advantaged savings account that allows individuals to set aside funds on a tax-free basis to pay for qualified expenses such as healthcare and dependent care.

Health Reimbursement Arrangements (HRAs)

A type of account that allows employers to contribute funds to reimburse employees for qualified medical expenses.

Commuter Benefits

A type of account that allows employees to set aside pre-tax dollars to pay for commuting expenses such as parking, transit, and ride-sharing.

COBRA Administration

A service that helps employers manage and administer COBRA benefits for their employees.

8. HealthEquity, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

HealthEquity, Inc. operates in a niche market, providing health savings accounts (HSAs) and other consumer-directed healthcare products. While there are some substitutes available, such as flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), they are not exact substitutes, and HealthEquity's products have distinct advantages.

Bargaining Power Of Customers

HealthEquity's customers are primarily employers and employees who use its HSA and other consumer-directed healthcare products. While customers have some bargaining power, HealthEquity's products are highly specialized, and customers are likely to have limited alternatives.

Bargaining Power Of Suppliers

HealthEquity's suppliers are primarily financial institutions and other partners that provide services related to its HSA and other consumer-directed healthcare products. The company has a diversified supplier base, and suppliers have limited bargaining power.

Threat Of New Entrants

The market for HSAs and other consumer-directed healthcare products is highly regulated, and new entrants would face significant barriers to entry, including obtaining necessary licenses and certifications, building a network of partners, and developing a customer base.

Intensity Of Rivalry

The market for HSAs and other consumer-directed healthcare products is moderately competitive, with a few established players, including HealthEquity, Fidelity, and Optum. While there is some rivalry, the market is growing, and there is room for multiple players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 30.29%
Debt Cost 6.72%
Equity Weight 69.71%
Equity Cost 6.72%
WACC 6.72%
Leverage 43.46%

11. Quality Control: HealthEquity, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Progyny

A-Score: 5.2/10

Value: 4.0

Growth: 8.1

Quality: 6.5

Yield: 0.0

Momentum: 8.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Doximity

A-Score: 5.1/10

Value: 0.3

Growth: 8.9

Quality: 9.5

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
HealthEquity

A-Score: 4.8/10

Value: 1.4

Growth: 8.3

Quality: 7.1

Yield: 0.0

Momentum: 6.5

Volatility: 5.3

1-Year Total Return ->

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Certara

A-Score: 4.0/10

Value: 2.3

Growth: 5.9

Quality: 5.7

Yield: 0.0

Momentum: 7.0

Volatility: 3.0

1-Year Total Return ->

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GoodRx

A-Score: 3.5/10

Value: 5.2

Growth: 5.9

Quality: 5.9

Yield: 0.0

Momentum: 2.0

Volatility: 1.7

1-Year Total Return ->

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Stock-Card
10x Genomics

A-Score: 2.9/10

Value: 5.9

Growth: 3.2

Quality: 3.8

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

94.51$

Current Price

94.51$

Potential

-0.00%

Expected Cash-Flows