Healthequity Inc (NASDAQ:HQY) shares surged over 3% in premarket trading on Wednesday after the Draper, Utah-based company reported second-quarter results that exceeded Wall Street expectations and provided an optimistic forecast for the full fiscal year.
As the largest Health Savings Account (HSA) custodian in the U.S., Healthequity pointed to solid revenue growth, expanding account volumes, and record margins as key drivers behind its strong performance.
The company posted adjusted earnings of $1.08 per share, a 26% increase from the prior year and well above analysts’ estimate of $0.92. Revenue rose 9% to $325.8 million, beating the consensus forecast of $320.74 million, fueled by gains in custodial services, interchange fees, and other service revenue.
Net income jumped 67% to $59.9 million, or $0.68 per diluted share, while adjusted EBITDA climbed 18% year-over-year to $151.1 million, surpassing the Visible Alpha consensus of $135.6 million.
Bank of America analysts highlighted the strength of the results, noting the “big EBITDA beat, supported by better service costs.” They added, “Service costs came in ahead of our estimate by ~$8MM, likely reflecting some better-than-expected improvement in fraud costs in the quarter.”
Gross margin hit a new record of 71%, allowing adjusted EBITDA to account for 46% of revenue, up from 43% in the year-ago quarter.
“The HealthEquity team delivered continued momentum during our second quarter with strong 9% revenue growth, record gross margin of 71% and record adjusted EBITDA of $151 million,” said President and CEO Scott Cutler. He added, “We believe our outlook is even brighter with our national lawmakers providing the largest legislative expansion of HSAs since 2006.”
By the end of the quarter, Healthequity managed 10 million HSAs, a 6% increase from last year, and a total of 17.1 million accounts including consumer-directed benefit plans. HSA assets reached $33.1 billion, up 12% year-over-year, split between $17.0 billion in cash and $16.1 billion in investments.
Looking ahead, Healthequity expects fiscal 2026 adjusted EPS between $3.74 and $3.91, above the consensus of $3.73. Revenue guidance sits in the $1.29 billion to $1.31 billion range, aligning with expectations.
During the quarter, the company repurchased 0.7 million shares for $66 million, with $351.8 million still available under its buyback authorization. Management reaffirmed its strategy of balancing investment in growth with shareholder returns.
Investors responded positively to Healthequity’s continued financial execution and exposure to the expanding HSA market. As the company scales its technology platform and broadens distribution, analysts see potential for further gains if legislative support and account adoption trends persist.
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