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Healthequity
(NASDAQ:HQY)
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Rating:73Outperform
Price Target:
$93.00
▲(8.09% Upside)
Action:Reiterated
Date:06/27/26
HQY scores well on fundamentals, driven by a clear profitability turnaround and strong, high-quality cash flow, supported by upbeat earnings-call execution and raised guidance. The overall score is held back by weak technical momentum and a premium P/E that leaves less room for error, alongside diligence items around unusually strong TTM growth and the large reported debt shift.
Positive Factors
Strong cash generation & FCF conversion
HealthEquity converts earnings into cash at a high rate: operating cash rose to $490M TTM with FCF ~ $488M, roughly matching net income. This durable cash generation supports buybacks, M&A optionality, and resilience through cycles without relying on external funding.
Negative Factors
HSA cash yield & custodial placement exposure
A meaningful portion of revenue depends on custodial cash yields and timing of contract placements. Large custodial maturities create structural sensitivity to interest-rate timing and placement execution; hedges cut volatility but do not fully remove timing and reinvestment risk to custodial revenue.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation & FCF conversion
HealthEquity converts earnings into cash at a high rate: operating cash rose to $490M TTM with FCF ~ $488M, roughly matching net income. This durable cash generation supports buybacks, M&A optionality, and resilience through cycles without relying on external funding.
Read all positive factors
Healthequity (HQY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.40B
Dividend YieldN/A
Average Volume (3M)1.03M
Price to Earnings (P/E)32.5
Beta (1Y)0.92
Revenue Growth7.56%
EPS Growth92.32%
CountryUS
Employees3,105
SectorHealthcare
Sector Strength45
IndustryMedical - Healthcare Information Services
Share Statistics
EPS (TTM)2.70
Shares Outstanding83,602,160
10 Day Avg. Volume965,124
30 Day Avg. Volume1,025,327
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)3.50
Price to Sales (P/S)5.62
P/FCF Ratio16.21
Enterprise Value/Market Cap1.07
Enterprise Value/Revenue5.94
Enterprise Value/Gross Profit8.16
Enterprise Value/Ebitda17.31
Forecast
1Y Price Target
$112.73Price Target Upside31.02% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
EPS Forecast (FY)4.73
Revenue Forecast (FY)$1.41B
Healthequity Business Overview & Revenue Model
Company Description
Headquartered in Draper, Utah, and established in 2002, HealthEquity, Inc. furnishes technology-powered service platforms to both individual consumers and employers across the United States. The company provides cloud-based solutions designed to a...
How the Company Makes Money
HealthEquity primarily makes money by administering health-related benefit accounts and earning fees and other income tied to the accounts it services.
Key revenue streams typically include:
1) Service and administration fees: HealthEquity charge...
Healthequity Earnings Call Summary
Earnings Call Date:May 28, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Sep 08, 2026
Earnings Call Sentiment Positive
The call emphasized solid execution: revenue and gross profit records, margin expansion, strong adjusted EBITDA growth (+17% YoY) and raised guidance, supported by healthy HSA account/asset growth, digital engagement gains, AI-driven service efficiencies, and an expanded $1B share repurchase authorization. Lowlights were mostly timing/one-time items (breakage fee, lower fraud reimbursements), early-stage marketplace revenue (not yet material), exposure in HSA cash maturities and interest-rate timing, and caution that some service-cost improvements may be seasonal or temporary. Overall, the positives around durable account/asset growth, margin expansion, cash generation and strategic initiatives materially outweigh the cautions and one-offs.Positive Updates
Revenue Growth and Record Service/Custodial Revenue
Total revenue grew 7% year-over-year in Q1 FY27. Service revenue reached a record $123 million (up 3% YoY) and custodial revenue was a record $174 million (up 11% YoY). Gross profit was a record $250 million, representing 72% of revenue versus 68% in the year-ago quarter.
Negative Updates
Service Cost Improvement Partly Driven by Temporary Factors
Service cost benefits in the quarter included a sharp reduction in fraud reimbursements ($0.3M this quarter vs ~$3.2M prior year) and unusually low medical claim usage among employees (estimated ~$2M of the YoY improvement) that management cautioned may be seasonal or revert, reducing confidence in permanence of the full cost improvement.
Read all updates
Q1-2027 Updates
Positive
Negative
Revenue Growth and Record Service/Custodial Revenue
Total revenue grew 7% year-over-year in Q1 FY27. Service revenue reached a record $123 million (up 3% YoY) and custodial revenue was a record $174 million (up 11% YoY). Gross profit was a record $250 million, representing 72% of revenue versus 68% in the year-ago quarter.
Read all positive updates
Company Guidance
HealthEquity raised its fiscal 2027 outlook, guiding revenue of roughly $1.41–$1.42 billion; GAAP net income of $242–$248 million (GAAP EPS $2.88–$2.95) and non‑GAAP net income of $392–$398 million (non‑GAAP EPS $4.66–$4.73) on an assumed ~84 million shares; adjusted EBITDA of $625–$633 million; an assumed GAAP and non‑GAAP tax rate of ~25%; and an expected average HSA cash yield of ~3.85% for FY27. Management noted $3.2 billion of HSA cash contracts maturing in FY27, $3.5 billion of forward treasury hedges locking ~3.9% net across FY27–FY29 to reduce yield volatility, and reiterated capital allocation plans including a $1 billion increase in share‑repurchase authorization, continued active buybacks, potential revolver reductions and maintained capacity for acquisitions.Healthequity Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
83
Very Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.34B | 1.31B | 1.20B | 999.59M | 861.75M | 756.56M |
| Gross Profit | 972.12M | 913.12M | 692.58M | 529.87M | 395.50M | 340.92M |
| EBITDA | 458.51M | 489.22M | 337.54M | 282.42M | 171.53M | 102.97M |
| Net Income | 230.70M | 215.20M | 96.70M | 55.71M | -26.14M | -44.29M |
Balance Sheet | ||||||
| Total Assets | 3.31B | 3.43B | 3.45B | 3.16B | 3.09B | 3.11B |
| Cash, Cash Equivalents and Short-Term Investments | 265.37M | 318.93M | 295.95M | 403.98M | 254.27M | 225.41M |
| Total Debt | 984.68M | 1.00B | 1.11B | 933.14M | 994.49M | 1.01B |
| Total Liabilities | 1.26B | 1.32B | 1.33B | 1.13B | 1.19B | 1.25B |
| Stockholders Equity | 2.05B | 2.11B | 2.11B | 2.04B | 1.90B | 1.85B |
Cash Flow | ||||||
| Free Cash Flow | 487.64M | 455.13M | 337.77M | 196.75M | 31.52M | 3.91M |
| Operating Cash Flow | 489.88M | 457.09M | 339.86M | 242.83M | 150.65M | 141.00M |
| Investing Cash Flow | -44.90M | -47.14M | -505.45M | -46.07M | -119.13M | -639.25M |
| Financing Cash Flow | -467.51M | -386.98M | 57.57M | -47.04M | -2.67M | 394.86M |
Healthequity Technical Analysis
Positive
86.04
Price Trends
85.12
Positive
82.39
Positive
88.10
Positive
Market Momentum
0.02
Positive
56.09
Neutral
37.90
Neutral
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 86.04 is below the 20-day moving average (MA) of 87.08, above the 50-day MA of 85.12, and below the 200-day MA of 88.10, indicating a bullish trend. The MACD of 0.02 indicates Positive momentum. The RSI at 56.09 is Neutral, neither overbought nor oversold. The STOCH value of 37.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HQY.
Healthequity Risk Analysis
Healthequity disclosed 43 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 |
|---|---|---|---|---|---|---|---|
73 Outperform | $7.40B | 32.52 | 10.94% | ― | 7.56% | 92.32% | |
73 Outperform | $3.82B | 19.80 | 19.36% | ― | 13.05% | -12.34% | |
73 Outperform | $6.11B | -12.38 | -138.70% | ― | 49.78% | -477.12% | |
72 Outperform | $13.54B | 45.38 | 12.71% | ― | 17.97% | 290.87% | |
67 Neutral | $1.78B | 86.62 | 1.64% | ― | 7.86% | -2.92% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
| ― | ― | ― | ― | ― | ― | ― |
* Healthcare Sector Average
HQY
Healthequity
87.81
-16.95
-16.18%
OMCL
Omnicell
40.92
11.52
39.18%
PINC
―
―
―
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DOCS
Doximity
20.59
-40.75
-66.43%
BTSG
BrightSpring Health Services, Inc.
68.98
45.39
192.41%
HNGE
Hinge Health, Inc. Class A
81.48
29.73
57.45%
Healthequity Corporate Events
Executive/Board ChangesShareholder Meetings
HealthEquity Shareholders Approve Directors and Equity Plans
Positive
Jun 26, 2026
At its June 25, 2026 annual meeting, HealthEquity stockholders voted on five proposals, with 83.8 million shares of common stock eligible to participate as of the May 6, 2026 record date. Investors elected ten directors to serve until the 2027 ann...
Business Operations and StrategyExecutive/Board Changes
Healthequity Enhances Executive Severance and Equity Incentives
Positive
May 8, 2026
On March 25, 2026, Healthequity’s Talent, Culture and Compensation Committee approved new vesting terms for future equity awards, and on May 5, 2026, the company amended employment agreements for its top executives, including CEO Scott Cutle...
Business Operations and StrategyExecutive/Board Changes
HealthEquity Announces CTO Departure and Leadership Transition
Neutral
Apr 6, 2026
On April 6, 2026, HealthEquity, Inc. announced it will terminate the employment of Chief Technology Officer Eli Rosner without cause, effective April 17, 2026, and transition oversight of the technology organization to Executive Vice President, Ch...
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
HealthEquity Adds Sanford Health CEO Bill Gassen to Board
Positive
Mar 30, 2026
On March 26, 2026, HealthEquity appointed William “Bill” Gassen, president and chief executive officer of Sanford Health, to its board of directors, expanding the board from nine to ten members, eight of whom are independent. Gassen wi...
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.