Healthequity (HQY) AI Stock Analysis

• Market Cap: $7.83B
• Dividend Yield: N/A
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 83.8
• Beta (1Y): 0.50
• Revenue Growth: 20.03%
• EPS Growth: 71.43%
• Country: US
• Employees: 3,105
• Sector: Healthcare
• Sector Strength: 60
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 0.69
• Shares Outstanding: 86,496,450
• 10 Day Avg. Volume: 891,099
• 30 Day Avg. Volume: 1,160,153
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.36
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 13.71
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $113.00
• Price Target Upside: 23.61% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

Healthequity's strong financial performance, particularly in revenue growth and cash flow generation, is a significant positive factor. However, the high P/E ratio and absence of dividends indicate a premium valuation that may pose risks if growth does not meet expectations. The technical analysis suggests mixed signals with some short-term strength but longer-term caution. The earnings call supports a positive outlook, though increased costs due to fraud need close monitoring. Overall, the stock exhibits a solid growth trajectory but with valuation and cost challenges that could impact future performance.

Positive Factors

Financial Performance

HQY reported strong operating results including revenue growth of 19% y/y and total HSA asset growth of 27% y/y.

Growth Potential

Longer term, there is a favorable outlook on the growing HSA market, HQY's ability to gain market share, and HSA cash repricing at higher yields, which should lead to margin expansion and double-digit EPS growth.

Market Position

The stock had been outperforming peers and the market due in part to the flight to quality for some investors, the growing expectation for federal legislative improvements in the functionality of HSAs, and a reasonably stable interest rate outlook.

Negative Factors

Cybersecurity Expenses

Temporarily elevated cybersecurity expenses are expected to carry over into the first half of FY26.

Management and Governance

The stock's recent underperformance is due in part to its disclosure of fraud against some of its HSA customers and near-term investor concerns about recent management changes.

Operational Costs

Service costs have increased due to the need to address fraudulent account activity.

Healthequity Business Overview & Revenue Model

Company Description

HealthEquity, Inc. (HQY) is a leading provider in the financial technology sector that specializes in administering health savings accounts (HSAs) and other consumer-directed benefits. Founded in 2002 and headquartered in Draper, Utah, the company offers a comprehensive platform that empowers individuals to optimize their healthcare savings and spending. HealthEquity's core services include HSA administration, flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and COBRA administration, catering to employers, individuals, and health plan providers.

How the Company Makes Money

HealthEquity generates revenue through a multi-faceted model primarily centered around its health savings account (HSA) administration services. The company earns money by charging fees for account maintenance and management, which are usually paid by employers or health plan providers. Additionally, HealthEquity benefits from interchange fees on HSA debit card transactions and earns interest on custodial funds held in HSAs. Another significant revenue stream comes from investment income, as account holders can invest their HSA funds in mutual funds and other investment vehicles through HealthEquity's platform. The company also partners with employers and health plans to provide a suite of consumer-directed benefits, such as FSAs and HRAs, which contribute to its earnings through service fees and administration charges. Strategic partnerships with health insurers and financial institutions further enhance its market reach and revenue potential.

Healthequity Financial Statement Overview

Summary

Healthequity exhibits robust financial performance across all verticals. The income statement highlights strong revenue growth and improving profit margins. The balance sheet showcases a solid equity position with low leverage, though there is potential to enhance ROE. The cash flow statement confirms strong cash generation and effective capital management. Overall, the company's financials indicate a strong growth trajectory with stable profitability and liquidity.

Income Statement

Healthequity shows strong revenue growth with a 20% increase year-over-year, reaching $1.2 billion in total revenue. Gross profit margins are high at 64.8%, indicating effective cost management. Net profit margin improved significantly to 8.1% from the previous year's 5.6%, reflecting enhanced operational efficiency. The EBIT and EBITDA margins are solid at 13.5%, showcasing profitability. Overall, the income statement reflects a robust growth trajectory and operational strength.

Balance Sheet

The company maintains a healthy equity position with a debt-to-equity ratio of 0.02, reflecting low leverage. The equity ratio stands at 61.3%, indicating a strong equity base. Return on equity improved to 4.6%, demonstrating better profitability from shareholders' investments. While the balance sheet shows stability and low financial risk, the moderate ROE indicates room for improvement in utilizing equity efficiently.

Cash Flow

Operating cash flow increased substantially, resulting in a favorable operating cash flow to net income ratio of 3.5, indicating strong cash generation relative to net earnings. Free cash flow grew by 71.7%, demonstrating effective cash management. The free cash flow to net income ratio of 3.5 also highlights the company's ability to generate cash beyond its operational needs. Overall, the cash flow statement reflects solid financial health and liquidity.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
1.20B	999.59M	861.75M	756.56M	733.57M
	Gross Profit
777.26M	622.64M	490.09M	423.71M	415.33M
	EBIT
162.33M	128.13M	38.92M	34.64M	83.28M
	EBITDA
337.54M	282.42M	171.53M	102.97M	154.93M
	Net Income Common Stockholders
96.70M	55.71M	-26.14M	-44.29M	8.83M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
295.95M	403.98M	254.27M	225.41M	328.80M
	Total Assets
3.45B	3.16B	3.09B	3.11B	2.71B
	Total Debt
1.11B	933.14M	994.49M	1.01B	1.07B
	Net Debt
812.57M	529.16M	740.22M	782.82M	746.17M
	Total Liabilities
1.33B	1.13B	1.19B	1.25B	1.33B
	Stockholders Equity
2.11B	2.04B	1.90B	1.85B	1.38B
Cash Flow		Free Cash Flow
337.77M	196.75M	31.52M	3.91M	84.66M
	Operating Cash Flow
339.86M	242.83M	150.65M	141.00M	181.62M
	Investing Cash Flow
-505.45M	-46.07M	-119.13M	-639.25M	-96.96M
	Financing Cash Flow
57.57M	-47.04M	-2.67M	394.86M	52.42M

Healthequity Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 91.42
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HQY, the sentiment is Positive. The current price of 91.42 is above the 20-day moving average (MA) of 84.19, above the 50-day MA of 90.83, and above the 200-day MA of 90.53, indicating a bullish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 58.25 is Neutral, neither overbought nor oversold. The STOCH value of 86.77 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HQY.

Healthequity Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOCS	76 Outperform	$11.13B	59.28	21.24%	―	17.47%	49.87%
PGNY	75 Outperform	$1.99B	41.40	11.14%	―	7.22%	-9.84%
PINC	73 Outperform	$1.87B	16.39	1.76%	4.11%	-10.24%	-106.48%
HQY	71 Outperform	$7.83B	83.85	4.66%	―	20.03%	71.43%
GDRX	68 Neutral	$1.80B	110.09	2.21%	―	5.61%	―
Sector *	52 Neutral	$5.35B	3.83	-41.61%	2.85%	17.10%	1.22%
TDOC	48 Neutral	$1.24B	―	-54.49%	―	-2.54%	-322.03%

Healthequity Corporate Events

Paul Black Resigns from HealthEquity Board

On April 22, 2025, Paul Black resigned from the Board of Directors of HealthEquity, Inc., leading to a reduction in the Board’s size to ten members. His resignation was not due to any disagreements with the company’s operations or policies. Additionally, the Board will further reduce to nine members on April 30, 2025, following Jon Kessler’s previously announced retirement.

Spark’s Take on HQY Stock

According to Spark, TipRanks’ AI Analyst, HQY is a Neutral.

Healthequity’s strong financial performance and growth in key metrics are the primary drivers of its stock score. The company’s robust revenue and profit growth, coupled with effective cash management, present a positive outlook. However, technical indicators reflect weak market momentum, and a high P/E ratio suggests overvaluation risks. The recent earnings call provided optimism but was dampened by increased costs related to fraud prevention. Overall, while the company has a solid financial foundation, market sentiment and valuation concerns weigh on the stock’s attractiveness.

To see Spark’s full report on HQY stock, click here.