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1. Company Snapshot

1.a. Company Description

HealthEquity, 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.

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1.b. Last Insights on HQY

HealthEquity's recent performance was driven by strong Q2 earnings, with EPS growth of 25.6% year-over-year and revenue growth of 8.6%. The company's HSA growth, with a 12% increase, also contributed positively. Additionally, the company's asset-linked revenue model and high margins have drawn investors' attention. HealthEquity's recent appointments to its executive leadership team are expected to drive growth and innovation. Furthermore, the company's deployment of agentic AI capabilities aims to elevate member support experience. (Source: Globe Newswire, Jefferies LLC)

1.c. Company Highlights

2. HealthEquity's Q3 FY2026 Earnings: Strong Growth and Margin Expansion

HealthEquity reported a 7% year-over-year revenue increase, with net income surging 806% and adjusted EBITDA growing 20% to $141.8 million, driven by a gross margin of 71% and an adjusted EBITDA margin of 40%. Earnings per share (EPS) came in at $1.01, beating estimates of $0.912. The company's strong financial performance was accompanied by significant growth in total accounts, with 17 million accounts, including 10 million Health Savings Accounts (HSAs), and HSA assets reaching $34 billion, up 15% year over year.

Publication Date: Dec -07

📋 Highlights
  • Revenue and Profit Growth Surpass Expectations: Revenue rose 7% YoY, net income surged 806%, and adjusted EBITDA hit $141.8 million (20% growth), with a 40% adjusted EBITDA margin.
  • HSA Assets and Account Growth Accelerate: HSA assets reached $34 billion (15% YoY), with 10 million HSAs and 17 million total accounts, reflecting strong adoption.
  • Strategic Technology Investments Drive Efficiency: AI and automation reduced call durations from 5-10 minutes to under 1 minute, targeting 30-33% service cost buckets ($106-110 million annually) for optimization.
  • Legislative Momentum Expands Market Potential: Proposals to make HSAs available to all Americans and ACA integration aim to unlock 2-3 million new households, targeting a $60.40 enhanced yield per HSA by 2027.
  • Financial Guidance Reflects Margin Resilience: Fiscal 2026 adjusted EBITDA guidance of $555–565 million (40% margin) and $259 million in buybacks underscore confidence in cash flow and shareholder returns.

Business Growth and Legislative Developments

The company is well-positioned for future growth, having launched a new direct HSA enrollment platform to support the Affordable Care Act exchanges. Legislative developments, such as the proposal to make HSAs available to every American, could further expand the company's market. With a strong track record of client retention, HealthEquity is poised to capitalize on the growing demand for HSAs.

Valuation and Pricing

Using the provided valuation metrics, HealthEquity's P/E Ratio stands at 42.37, P/B Ratio at 3.81, and EV/EBITDA at 18.87. These metrics suggest that the market has priced in significant growth expectations. Analysts estimate next year's revenue growth at 9.8%, which may be challenging to achieve given the current valuation multiples.

Operational Efficiency and Cost Management

HealthEquity has been improving operational efficiency, with service costs around $320-330 million per year. The company is leveraging AI and automation to reduce costs, particularly in member services. The adoption of the company's app has been significant, with 400,000 downloads in October alone, driven by the passkey authentication requirement.

Future Outlook and Guidance

The company remains optimistic about new account growth in Q4, driven by enterprise demand to control medical costs. HealthEquity expects to continue investing in technology and security, and to make additional share repurchases under its remaining $259 million repurchase authorization. The company will provide 2027 guidance at JPMorgan in January, and is expected to reprice higher, with some of these changes already hedged.

Growth Initiatives and Market Opportunities

HealthEquity is focusing on growth initiatives, including brand marketing, upper funnel awareness, and consideration, as well as paid search and social channels. The company sees significant opportunities in the HSA market, with a Total Addressable Market (TAM) expansion potential, particularly with the brand product opportunity. The company estimates that 2-3 million households may be impacted, with potential for a "steep, but fast learning curve" as people understand the benefits of HSAs.

3. NewsRoom

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HealthEquity Stock Gains as Q3 Earnings Beat Estimates, Revenues Up Y/Y

Dec -04

Source: zacks.com

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HealthEquity, Inc. (HQY) Q3 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

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HealthEquity (HQY) Q3 Earnings: How Key Metrics Compare to Wall Street Estimates

Dec -04

Source: zacks.com

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HealthEquity (HQY) Tops Q3 Earnings and Revenue Estimates

Dec -03

Source: zacks.com

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HealthEquity Reports Third Quarter Ended October 31, 2025 Financial Results

Dec -03

Source: globenewswire.com

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HealthEquity: Flywheel Keeps Spinning

Dec -02

Source: seekingalpha.com

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HealthEquity, Inc. $HQY Shares Sold by Advantage Alpha Capital Partners LP

Nov -28

Source: defenseworld.net

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Exploring Analyst Estimates for HealthEquity (HQY) Q3 Earnings, Beyond Revenue and EPS

Nov -27

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.95%)

6. Segments

Service

Expected Growth: 11.7%

HealthEquity's 11.7% growth is driven by increasing adoption of consumer-directed healthcare accounts, expansion of existing client relationships, and strategic acquisitions. Additionally, the company's investments in technology and customer service have improved user experience, leading to higher retention rates and cross-selling opportunities.

Custodial

Expected Growth: 10.47%

HealthEquity's Custodial segment growth of 10.47% is driven by increasing adoption of Health Savings Accounts (HSAs), rising healthcare costs, and growing demand for consumer-directed healthcare solutions. Additionally, strategic partnerships, expanded product offerings, and effective marketing efforts contribute to the segment's growth.

Interchange

Expected Growth: 9.98%

HealthEquity's 9.98% growth is driven by increasing adoption of Health Savings Accounts (HSAs), expansion into new markets, and strategic partnerships. Additionally, the company's focus on providing a comprehensive platform for consumers to manage their healthcare expenses, coupled with its strong brand recognition, has contributed to its growth momentum.

7. Detailed Products

Health Savings Accounts (HSAs)

A tax-advantaged savings account that allows individuals to set aside funds on a tax-free basis to pay for qualified medical expenses.

Flexible Spending Accounts (FSAs)

A tax-advantaged savings account that allows individuals to set aside funds on a tax-free basis to pay for qualified expenses such as healthcare and dependent care.

Health Reimbursement Arrangements (HRAs)

A type of account that allows employers to contribute funds to reimburse employees for qualified medical expenses.

Commuter Benefits

A type of account that allows employees to set aside pre-tax dollars to pay for commuting expenses such as parking, transit, and ride-sharing.

COBRA Administration

A service that helps employers manage and administer COBRA benefits for their employees.

8. HealthEquity, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

HealthEquity, Inc. operates in a niche market, providing health savings accounts (HSAs) and other consumer-directed healthcare products. While there are some substitutes available, such as flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), they are not exact substitutes, and HealthEquity's products have distinct advantages.

Bargaining Power Of Customers

HealthEquity's customers are primarily employers and employees who use its HSA and other consumer-directed healthcare products. While customers have some bargaining power, HealthEquity's products are highly specialized, and customers are likely to have limited alternatives.

Bargaining Power Of Suppliers

HealthEquity's suppliers are primarily financial institutions and other partners that provide services related to its HSA and other consumer-directed healthcare products. The company has a diversified supplier base, and suppliers have limited bargaining power.

Threat Of New Entrants

The market for HSAs and other consumer-directed healthcare products is highly regulated, and new entrants would face significant barriers to entry, including obtaining necessary licenses and certifications, building a network of partners, and developing a customer base.

Intensity Of Rivalry

The market for HSAs and other consumer-directed healthcare products is moderately competitive, with a few established players, including HealthEquity, Fidelity, and Optum. While there is some rivalry, the market is growing, and there is room for multiple players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 30.29%
Debt Cost 6.72%
Equity Weight 69.71%
Equity Cost 6.72%
WACC 6.72%
Leverage 43.46%

11. Quality Control: HealthEquity, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Progyny

A-Score: 5.2/10

Value: 4.0

Growth: 8.1

Quality: 6.5

Yield: 0.0

Momentum: 8.0

Volatility: 4.3

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Doximity

A-Score: 5.1/10

Value: 0.3

Growth: 8.9

Quality: 9.5

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

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HealthEquity

A-Score: 4.8/10

Value: 1.4

Growth: 8.3

Quality: 7.1

Yield: 0.0

Momentum: 6.5

Volatility: 5.3

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Certara

A-Score: 4.0/10

Value: 2.3

Growth: 5.9

Quality: 5.7

Yield: 0.0

Momentum: 7.0

Volatility: 3.0

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GoodRx

A-Score: 3.5/10

Value: 5.2

Growth: 5.9

Quality: 5.9

Yield: 0.0

Momentum: 2.0

Volatility: 1.7

1-Year Total Return ->

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10x Genomics

A-Score: 2.9/10

Value: 5.9

Growth: 3.2

Quality: 3.8

Yield: 0.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

96.0$

Current Price

96$

Potential

-0.00%

Expected Cash-Flows