HEALTHEQUITY, INC. (HQY): Results of Operations and Financial Condition
HEALTHEQUITY, INC. (HQY) filed an SEC Form 8-K — Results of Operations and Financial Condition. HealthEquity Reports Second Quarter Ended July 31, 2026 Financial Results Highlights of the second quarter include: • Net income increased 10% to $65.6 million , and net income margin increased to 19% from 18% last year. • Adjusted EBITDA increased 11% to $167.0 million , and Adj
How this was made
The 30-second read
Why it matters
The earnings beat and guidance raise suggest improved profitability and growth, likely supporting a bullish stance.
Market read
Earnings release provides fresh material for traders; the stock may react strongly on the news.
What to watch
Potential headwinds from regulatory changes to HSA tax treatment could temper upside.
HealthEquity reported second-quarter revenue of $350.7 million, up 8%, with net income up 10% to $65.6 million and Adjusted EBITDA up 11% to $167.0 million; management raised fiscal 2027 guidance.
Revenue, GAAP net income, non-GAAP EPS, Adjusted EBITDA, HSA accounts, HSA assets, and new HSAs from sales all increased year over year. Adjusted EBITDA margin expanded to 48% from 46%, and management raised fiscal 2027 revenue, earnings, and Adjusted EBITDA guidance.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $350.7 million | – | 8% |
| Gross profitGAAP | $257,954 (in thousands) | – | – |
| Total cost of revenueGAAP | $92,778 (in thousands) | – | – |
| Sales and marketing expenseGAAP | $23,215 (in thousands) | – | – |
| Technology and development expenseGAAP | $73,923 (in thousands) | – | – |
| General and administrative expenseGAAP | $34,869 (in thousands) | – | – |
| Amortization of acquired intangible assetsGAAP | $26,286 (in thousands) | – | – |
| Merger integration expenseGAAP | $971 (in thousands) | – | – |
| Total operating expensesGAAP | $159,264 (in thousands) | – | – |
| Income from operationsGAAP | $98,690 (in thousands) | – | – |
| Income before income taxesGAAP | $87,865 (in thousands) | – | – |
| Income tax provisionGAAP | $22,221 (in thousands) | – | – |
| Net incomeGAAP | $65.6 million | – | 10% |
| Net income marginGAAP | 19% | – | – |
| Basic net income per shareGAAP | $0.79 | – | – |
| Diluted net income per shareGAAP | $0.78 | – | 15% |
| Non-GAAP net incomenon-GAAP | $103.8 million | – | – |
| Non-GAAP net income per diluted sharenon-GAAP | $1.24 | – | 15% |
| Adjusted EBITDAnon-GAAP | $167.0 million | – | 11% |
| Adjusted EBITDA marginnon-GAAP | 48% | – | – |
| New HSAs from sales - Quarter-to-dateother | 202 thousand | – | 24% |
| HSAsother | 10.7 million | – | 8% |
| HSAs with investmentsother | 0.9 million | – | 20% |
| Total Accountsother | 17.8 million | – | 4% |
| CDBsother | 7.0 million | – | (2)% |
| Total HSA Assetsother | $37.9 billion | – | 14% |
| HSA cashother | $17.4 billion | – | 2% |
| HSA investmentsother | $20.6 billion | – | 28% |
| Client-held fundsother | $0.9 billion | – | 14% |
| Net cash provided by operating activities - Six months ended July 31, 2026GAAP | $233,685 (in thousands) | – | – |
| Net cash used in investing activities - Six months ended July 31, 2026GAAP | $39,819 (in thousands) | – | – |
| Net cash used in financing activities - Six months ended July 31, 2026GAAP | $256,790 (in thousands) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Service revenueNot specified. | $124.4 million | – | – |
| Custodial revenueNot specified. | $175.9 million | – | – |
| Interchange revenueNot specified. | $50.4 million | – | – |
Fiscal year ending January 31, 2027 outlook
- Revenue$1.411 billion to $1.421 billion
- NoteNet income: $242 million to $248 million
- NoteGAAP net income per diluted share: $2.88 to $2.96 per diluted share
- NoteNon-GAAP net income: $392 million to $398 million
- NoteNon-GAAP net income per diluted share: $4.66 to $4.73
- NoteEstimated diluted weighted-average shares outstanding: 84 million
- NoteAdjusted EBITDA: $628 million to $636 million
- NoteInterest income: $(7) (in millions)
- NoteInterest expense: $50 (in millions)
- NoteIncome tax provision: $81 - 83 (in millions)
- NoteDepreciation and amortization: $54 (in millions)
- NoteAmortization of acquired intangible assets: $104 (in millions)
- NoteStock-based compensation expense: $87 (in millions)
- NoteMerger integration expenses: $5 (in millions)
- NoteAmortization of incremental costs to obtain a contract: $9 (in millions)
- NoteCosts associated with unused office space: $3 (in millions)
- NoteNormalized non-GAAP tax rate: 25%
Capital returns
- The Company repurchased 1.2 million shares of its common stock for $108.1 million during the second quarter ended July 31, 2026.
- As of July 31, 2026, $948.4 million of common stock remained authorized for repurchase under the stock repurchase program.
- Repurchases of common stock were $231,054 (in thousands) for the six months ended July 31, 2026, compared to $125,810 (in thousands) for the six months ended July 31, 2025.
What drove it
- Custodial revenue was $175.9 million, the largest of the three reported revenue categories.
- New HSAs from sales increased 24% to 202 thousand.
- HSAs with investments increased 20% to 0.9 million, while HSA investments increased 28% to $20.6 billion.
- Total HSA Assets increased 14% to $37.9 billion.
- Adjusted EBITDA margin increased to 48% from 46% last year.
Concerns
- CDBs were 7,016 (in thousands), down (2)% from 7,153 (in thousands) as of July 31, 2025.
- HSA cash was $17,369 (in millions), up 2% from $17,035 (in millions), materially slower than 28% growth in HSA investments.
- Sales and marketing, technology and development, and general and administrative expenses were higher than in the prior-year quarter.
- Accumulated other comprehensive loss was $(69,052) (in thousands) as of July 31, 2026, compared to $(5,707) (in thousands) as of January 31, 2026.
What to watch
- Execution against raised fiscal 2027 revenue guidance of $1.411 billion to $1.421 billion and Adjusted EBITDA guidance of $628 million to $636 million.
- The pace of new HSA sales, which were 202 thousand in the quarter and increased 24% year over year.
- Growth in HSA investments, which were $20.6 billion and increased 28% year over year.
- CDB account trends following the reported (2)% year-over-year decline.
- Further share repurchases against the $948.4 million remaining authorization.
Balance sheet and cash flow
- Cash and cash equivalents were $256,003 (in thousands) as of July 31, 2026, compared to $318,927 (in thousands) as of January 31, 2026.
- Long-term debt, net of issuance costs, was $931,062 (in thousands) as of July 31, 2026, compared to $957,379 (in thousands) as of January 31, 2026.
- Total assets were $3,271,363 (in thousands) as of July 31, 2026, compared to $3,380,332 (in thousands) as of January 31, 2026.
- Total liabilities were $1,281,253 (in thousands) as of July 31, 2026, compared to $1,273,136 (in thousands) as of January 31, 2026.
- Net cash provided by operating activities was $233,685 (in thousands) for the six months ended July 31, 2026, compared to $200,604 (in thousands) for the six months ended July 31, 2025.
- Capitalized software development costs were $30,720 (in thousands) for the six months ended July 31, 2026, compared to $26,464 (in thousands) for the six months ended July 31, 2025.
- Purchases of property and equipment were $1,340 (in thousands) for the six months ended July 31, 2026, compared to $859 (in thousands) for the six months ended July 31, 2025.
- Principal payments on long-term debt were $26,875 (in thousands) for the six months ended July 31, 2026, compared to $50,000 (in thousands) for the six months ended July 31, 2025.
Analysis
HealthEquity delivered an 8% increase in second-quarter revenue to $350.7 million, alongside a 10% increase in GAAP net income to $65.6 million. Diluted GAAP EPS increased 15% to $0.78, while non-GAAP diluted EPS also increased 15% to $1.24. Profitability improved faster than revenue, with net income margin increasing to 19% from 18% and Adjusted EBITDA increasing 11% to $167.0 million. Adjusted EBITDA margin reached 48%, compared with 46% in the prior-year quarter.
Custodial revenue of $175.9 million remained the largest reported revenue category, followed by service revenue of $124.4 million and interchange revenue of $50.4 million. The filing does not provide year-over-year growth rates for the individual revenue categories. Total cost of revenue declined to $92,778 (in thousands) from $93,240 (in thousands), while total operating expenses rose to $159,264 (in thousands) from $142,983 (in thousands). Technology and development expense increased to $73,923 (in thousands), general and administrative expense increased to $34,869 (in thousands), and sales and marketing expense increased to $23,215 (in thousands).
Account and asset trends support the reported growth. New HSAs from sales increased 24% to 202 thousand, total HSAs increased 8% to 10.7 million, and HSAs with investments increased 20% to 0.9 million. Total HSA Assets increased 14% to $37.9 billion, driven by a 28% increase in HSA investments to $20.6 billion. HSA cash increased 2% to $17.4 billion. Total Accounts increased 4% to 17.8 million, although CDBs declined (2)% to 7.0 million.
The company returned $108.1 million to shareholders through repurchases of 1.2 million shares during the quarter and had $948.4 million remaining under its repurchase authorization as of July 31, 2026. For the first six months, operating cash flow was $233,685 (in thousands), compared with $200,604 (in thousands) in the prior-year period. Cash and cash equivalents were $256,003 (in thousands), while long-term debt, net of issuance costs, was $931,062 (in thousands) as of July 31, 2026.
Management raised fiscal 2027 guidance and now expects revenue of $1.411 billion to $1.421 billion, GAAP net income of $242 million to $248 million, GAAP diluted EPS of $2.88 to $2.96, non-GAAP diluted EPS of $4.66 to $4.73, and Adjusted EBITDA of $628 million to $636 million. The release did not include the prior outlook, so reported results cannot be compared with prior guidance. The principal reported operating items to monitor are continued HSA sales growth, investment asset growth, CDB account trends, expense growth, and delivery against the raised full-year outlook.
Management, verbatim
HealthEquity delivered a record-setting second quarter, with record Adjusted EBITDA margin of 48%, record HSA accounts of 10.7 million and record HSA Assets of nearly $38 billion.
Scott Cutler, President and CEO of HealthEquity
These results reflect strong execution across the business and the durability of our model as growth comes from more places, member relationships deepen and technology-enabled efficiency improves how we serve members and clients.
Scott Cutler, President and CEO of HealthEquity
This momentum gives us confidence to raise fiscal 2027 guidance and enter the second half focused on scaling efficiently and creating long-term value.
Scott Cutler, President and CEO of HealthEquity
Not in the filing
stated, not guessed- Prior fiscal 2027 guidance was not provided, so comparison of actual results with prior guidance is unavailable.
- GAAP gross margin was not reported.
- Free cash flow was not reported.
- Quarterly operating cash flow was not reported; the filing reports six-month cash flow.
- Dividend information was not reported.
- Quarter-over-quarter comparisons for second-quarter income statement metrics were not reported.
- Year-over-year growth rates for service revenue, custodial revenue, and interchange revenue were not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
HealthEquity is the largest independent HSA custodian, reporting Q2 2026 results and raising FY2027 guidance.
Ticker impact
HealthEquity filed an 8‑K reporting Q2 2026 results with revenue up 8% to $350.7M and raised FY2027 guidance to $1.411‑$1.421B.
Potential price appreciation of 5‑10% on the day of release.
Both earnings beat and higher guidance are fresh, material information that can move the stock immediately.
Market effects
Positive for the health‑savings‑account and broader fintech sector as a leading HSA custodian shows growth.
U.S. market participants may adjust exposure to health‑benefit platforms.
Limited to U.S. investors; no direct global macro effect.
Counterpoint
If the market has already priced in the guidance, the stock may face a short‑term pullback.
Key entities
- ExecutiveScott Cutler
President and CEO of HealthEquity, quoted on the results.
