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Healthequity (HQY)
NASDAQ:HQY
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Healthequity
(NASDAQ:HQY)
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Rating:76Outperform
Price Target:
$102.00
▲(15.14% Upside)
HealthEquity's strong financial performance and positive earnings call sentiment are the primary drivers of its score. While technical indicators suggest a bearish trend, the company's robust growth and strategic initiatives, including legislative wins and AI enhancements, provide a solid foundation for future performance. The high P/E ratio indicates overvaluation, which slightly tempers the overall score.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong demand for Healthequity's services, supporting long-term business expansion and market presence.
Technological Advancements
Adopting AI enhances operational efficiency and customer experience, providing a competitive edge and supporting sustainable growth.
Legislative Wins
Legislative changes expanding HSA access can significantly increase the customer base, driving future growth and market penetration.
Negative Factors
Underperforming Labor Market
A weaker labor market may impact employer-based HSA enrollments, potentially slowing account growth and affecting revenue streams.
Return on Equity
While improving, ROE remains relatively low, indicating potential inefficiencies in equity utilization that could limit financial performance.
High Valuation Concerns
A high valuation may limit stock attractiveness and could lead to volatility if growth expectations are not met, impacting investor sentiment.
Healthequity (HQY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.63B
Dividend YieldN/A
Average Volume (3M)1.17M
Price to Earnings (P/E)53.6
Beta (1Y)0.73
Revenue Growth15.45%
EPS Growth37.72%
CountryUS
Employees3,105
SectorHealthcare
Sector Strength45
IndustryMedical - Healthcare Information Services
Share Statistics
EPS (TTM)1.08
Shares Outstanding86,156,334
10 Day Avg. Volume885,786
30 Day Avg. Volume1,167,335
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.21
Enterprise Value/Revenue7.30
Enterprise Value/Gross Profit10.99
Enterprise Value/Ebitda22.84
Forecast
1Y Price Target
$123.56Price Target Upside39.47% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Healthequity Business Overview & Revenue Model
Company DescriptionHealthEquity, 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.
How the Company Makes MoneyHealthequity generates revenue through multiple key streams. Primarily, the company earns fees from account holders, which include monthly maintenance fees, transaction fees, and investment fees for those who choose to invest their HSA balances. Additionally, Healthequity collaborates with employers and third-party administrators, providing them with customized HSA and benefits solutions, for which it charges service fees. The company also benefits from interest income generated on the cash balances held in HSAs. Significant partnerships with employers, insurance companies, and financial institutions bolster its client base and enhance its service offerings, contributing to its overall earnings.
Healthequity Earnings Call Summary
Earnings Call Date:Sep 02, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Dec 09, 2025
Earnings Call Sentiment Positive
HealthEquity's earnings call highlighted significant achievements in financial performance, legislative wins for HSAs, and technological advancements. While there were challenges related to the macroeconomic environment, particularly the labor market, the overall sentiment is positive due to the company's strong growth and strategic positioning.Q2-2026 Updates
Positive Updates
Record Gross Margin and Adjusted EBITDA
HealthEquity reported a record gross margin of 71% and near-record adjusted EBITDA margin of 46% for Q2 fiscal 2026.
Strong Growth in HSA and CDB Accounts
HSAs grew 6%, CDB accounts grew 4%, driving total accounts up 5%. HSA assets were up 12% year-over-year.
Significant Legislative Wins for HSAs
The budget bill passed in July expanded HSAs by allowing direct primary care arrangements and low-cost telehealth, potentially increasing HSA accessibility for 3 to 4 million more American families.
Improved Fraud Prevention and Security Measures
Fraud service costs reduced from $3 million in Q1 to an exit run rate in Q2 near the goal of one basis point of total HSA assets per year.
AI and Technology Enhancements
Launched expedited claims using AI technology, improving member satisfaction and reducing processing costs. Also completed moving the v5 platform to be 100% cloud-based, resulting in 92% faster response times.
Negative Updates
Underperforming Labor Market
The labor market is underperforming relative to expectations, with employment growth down 40% year-to-date year-over-year through July.
Company Guidance
During the HealthEquity Second Quarter 2026 earnings call, management highlighted several key metrics reflecting strong performance. Revenue increased by 9% year-over-year, while net income surged by 67% and Adjusted EBITDA rose by 18% to a record high, alongside an all-time gross margin high of 71% and near-record adjusted EBITDA margin of 46%. Health Savings Accounts (HSAs) and Consumer-Directed Benefits (CDB) accounts grew by 6% and 4%, respectively, driving a total account increase of 5%. HSA assets rose by 12%, with the number of HSA members investing growing by 10%, boosting invested assets by 23% to $16.1 billion. The company also reported HSA cash of $17 billion and an average balance growth of 6% year-over-year. The call also touched upon macroeconomic challenges, noting a softer labor market compared to previous years, yet expressing optimism about new enterprise wins and client retention. The company is leveraging AI to enhance its services, reducing costs while increasing member satisfaction. Additionally, legislative changes expanding HSA access were discussed, potentially enabling 3 to 4 million more American families to benefit from HSAs. Looking ahead, HealthEquity raised its fiscal 2026 guidance, expecting revenue between $1.29 and $1.31 billion, GAAP net income of $185 to $200 million, and Adjusted EBITDA between $540 million and $560 million.Healthequity Financial Statement Overview
Summary
Healthequity demonstrates strong financial health across all statements, with impressive revenue and profit growth, efficient leverage management, and robust cash flow generation. The company is well-positioned for future growth, although continued focus on improving return on equity will further enhance financial performance.Income Statement
Healthequity shows strong revenue growth with a TTM increase of 2.08% and consistent improvement in gross profit margins, reaching 66.43%. The net profit margin has also improved significantly to 11.49% TTM, indicating enhanced profitability. EBIT and EBITDA margins have strengthened, reflecting operational efficiency. Overall, the income statement demonstrates robust growth and profitability trends.85
Very Positive
Balance Sheet
The company's balance sheet is stable with a low debt-to-equity ratio of 0.02 TTM, indicating strong leverage management. Return on equity has improved to 6.85% TTM, showcasing better utilization of equity. The equity ratio remains healthy, reflecting financial stability. However, the company should continue to focus on improving ROE further.78
Positive
Cash Flow
Healthequity's cash flow statement is strong, with a significant free cash flow growth rate of 288.06% TTM. The operating cash flow to net income ratio of 3.15 indicates efficient cash generation relative to earnings. The free cash flow to net income ratio of 0.93 TTM highlights effective cash management. Overall, the cash flow position is robust, supporting future growth.82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.27B | 1.20B | 999.59M | 861.75M | 756.56M | 733.57M |
| Gross Profit | 842.98M | 777.26M | 622.64M | 490.09M | 423.71M | 415.33M |
| EBITDA | 405.50M | 337.54M | 282.42M | 171.53M | 102.97M | 154.93M |
| Net Income | 145.84M | 96.70M | 55.71M | -26.14M | -44.29M | 8.83M |
Balance Sheet | ||||||
| Total Assets | 3.42B | 3.45B | 3.16B | 3.09B | 3.11B | 2.71B |
| Cash, Cash Equivalents and Short-Term Investments | 304.46M | 295.95M | 403.98M | 254.27M | 225.41M | 328.80M |
| Total Debt | 1.06B | 1.11B | 933.14M | 994.49M | 1.01B | 1.07B |
| Total Liabilities | 1.27B | 1.33B | 1.13B | 1.19B | 1.25B | 1.33B |
| Stockholders Equity | 2.15B | 2.11B | 2.04B | 1.90B | 1.85B | 1.38B |
Cash Flow | ||||||
| Free Cash Flow | 339.62M | 337.77M | 196.75M | 31.52M | 3.91M | 84.66M |
| Operating Cash Flow | 366.90M | 339.86M | 242.83M | 150.65M | 141.00M | 181.62M |
| Investing Cash Flow | -53.74M | -505.45M | -46.07M | -119.13M | -639.25M | -96.96M |
| Financing Cash Flow | -335.59M | 57.57M | -47.04M | -2.67M | 394.86M | 52.42M |
Healthequity Technical Analysis
Negative
88.59
Price Trends
92.28
Negative
96.88
Negative
96.83
Negative
Market Momentum
-0.26
Positive
39.61
Neutral
9.18
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HQY, the sentiment is Negative. The current price of 88.59 is below the 20-day moving average (MA) of 93.22, below the 50-day MA of 92.28, and below the 200-day MA of 96.83, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 39.61 is Neutral, neither overbought nor oversold. The STOCH value of 9.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HQY.
Healthequity Risk Analysis
Healthequity disclosed 41 risk factors in its most recent earnings report. Healthequity reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Healthequity Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $13.72B | 62.89 | 24.25% | ― | 19.45% | 46.46% | |
76 Outperform | $5.02B | 95.94 | 1.60% | ― | 20.60% | ― | |
76 Outperform | $7.63B | 53.63 | 6.78% | ― | 15.45% | 37.72% | |
70 Neutral | $2.30B | 126.53 | 3.56% | 3.01% | -24.79% | -78.38% | |
66 Neutral | $1.42B | 62.74 | 1.87% | ― | 6.39% | ― | |
60 Neutral | $4.02B | 27.69 | ― | ― | 43.35% | -430.79% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
HQY
Healthequity
88.59
6.09
7.38%
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30.95
-11.30
-26.75%
PINC
Premier
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DOCS
Doximity
73.26
30.04
69.50%
BTSG
BrightSpring Health Services, Inc.
28.36
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94.38%
HNGE
Hinge Health, Inc. Class A
51.29
11.13
27.71%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.