A month has gone by since the last earnings report for HealthEquity (HQY). Shares have added about 5.2% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is HealthEquity due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for HealthEquity, Inc. before we dive into how investors and analysts have reacted as of late.
HQY Q4 Earnings Beat Estimates, Revenues Up Y/Y
HealthEquity reported adjusted earnings per share of 95 cents for fourth-quarter fiscal 2026, surpassing the Zacks Consensus Estimate by 6.7%. The bottom line improved 37.7% on a year-over-year basis.
GAAP earnings per share in the fiscal fourth quarter were 58 cents, up from the year-ago quarter’s earnings per share of 30 cents.
HealthEquity Revenues in Detail
In the fiscal fourth quarter, the company generated revenues of $334.6 million, which beat the Zacks Consensus Estimate by 0.5%. The top line improved 7.3% from the prior-year quarter.
For fiscal 2026, HQY registered total revenues of $1.31 billion, up 9.5% year over year. Adjusted earnings per share amounted to $2.46, up from $1.09 a year ago.
Revenue Sources of HealthEquity
HealthEquity derives revenues from three sources: Service revenues, Custodial revenues and Interchange revenues.
Service revenues totaled $127.1 million in the quarter, up 2.3% year over year. This reflected a higher number of HSAs and invested HSA Assets.
Custodial revenues totaled $161.4 million, up 11.9% from the year-ago period.
Interchange revenues totaled $46.1 million, up 6% year over year.
HQY Margin Details
In the quarter under review, HealthEquity’s gross profit rose 20.7% year over year to $228.1 million. The gross margin expanded 760 basis points (bps) to 68.2%.
Sales and marketing expenses increased 7.9% to $24.9 million year over year, whereas technology and development expenses climbed 8.8% year over year to $70.4 million. General and administrative expenses increased 11.8% year over year to $33.5 million. Total operating expenses of $157.1 million decreased 6.9% year over year.
Operating profit totaled $71.1 million, improving significantly by 68.6% from the prior-year quarter, mainly driven by lower service costs and merger integration expenses. Thus, the operating margin in the quarter expanded by 770 bps to 21.2% compared with the prior-year quarter.
Financial Position of HQY
The company exited the fourth quarter of fiscal 2026 with cash and cash equivalents of $318.9 million compared with $309.3 million at the third quarter of fiscal 2026-end. Total debt (net of issuance costs) at the end of fourth-quarter fiscal 2026 was $957.4 million compared with $982.1 million at the end of third-quarter fiscal 2026.
Cumulative net cash provided by operating activities at the end of fourth-quarter fiscal 2026 totaled $457.1 million compared with $339.9 million a year ago.
HealthEquity’s FY27 Guidance
HealthEquity has provided its revenue and earnings per share projections for fiscal 2027.
For fiscal 2027, revenues are projected to be between $1.405 billion and $1.415 billion. The Zacks Consensus Estimate is currently pegged at $1.39 billion.
Adjusted earnings per share are expected to be in the range of $4.56-$4.65. The Zacks Consensus Estimate is currently pegged at $4.58.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, HealthEquity has a nice Growth Score of B, a score with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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, Inc. (HQY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).