Loading...
01/11 03:21
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate positive financial performance, strategic HSA market expansion, and efficiency improvements through AI and automation. Despite competitive pressures, the company maintains high retention rates and leverages a strong enterprise pipeline. The Bronze plan expansion adds significant growth potential, supported by positive analyst sentiment. While management avoided some specifics, optimistic guidance and strategic investments in technology and shareholder returns bolster a positive outlook.
Revenue Revenue increased 7% year-over-year. Service revenue increased 1% year-over-year to $120.3 million. Custodial revenue grew 13% to $159.1 million in the third quarter. Interchange revenue grew 6% to $42.8 million.
Net Income Net income for the third quarter was $51.7 million, up 806% compared to the third quarter last year, which included a $30 million one-time legal settlement. Non-GAAP net income increased 26% to $87.7 million.
Adjusted EBITDA Adjusted EBITDA for the quarter was $141.8 million, up 20% compared to Q3 last year. Adjusted EBITDA as a percentage of revenue was 44%, up 460 basis points compared to 39% in the third quarter last year.
Gross Margin Gross profit of $228.1 million resulted in a 71% gross margin in the third quarter, up from 66% in the third quarter last year.
HSA Assets HSA assets grew 15% year-over-year to over $34 billion. The number of HSA members who invest grew 12%, and HSA invested assets grew 29% to $17.5 billion.
Total Accounts HealthEquity ended Q3 with more than 17 million total accounts, including more than 10 million HSAs. Total accounts grew 5% year-over-year, with net CDB accounts up 3% and HSAs up 6%.
Average HSA Balances The average HSA balances grew 8% year-over-year, contributing to the 15% increase in HSA assets.
Fraud Costs Fraud costs totaled approximately $0.3 million in the third quarter, well below the run rate target of 1 basis point of total HSA assets per year.
Cash on Hand As of October 31, 2025, cash on hand was $309 million, with $339 million of cash flows generated from operations in the first 9 months of fiscal '26.
Debt Outstanding Approximately $982 million of debt was outstanding net of issuance costs after paying down $25 million on the revolver during the quarter.
New HSA Enrollment Platform: Launched a streamlined digital experience for direct HSA enrollment through mobile and web platforms, targeting individuals choosing Bronze plans on ACA exchanges.
HealthEquity Marketplace: Introduced a platform providing access to affordable health care solutions, including a program supporting weight loss through GLP-1s. Early adoption and retention data are positive.
HSA Growth: HealthEquity ended Q3 with over 17 million total accounts, including more than 10 million HSAs. HSA assets grew 15% year-over-year to $34 billion.
New Employer Clients: Collaborating with employers and partners to support HSA adoption, including new clients offering HSAs for the first time.
Fraud Prevention: Investments in security reduced fraud costs to $0.3 million in Q3, below the target of 1 basis point of total HSA assets per year.
AI Integration: Implemented AI solutions like expedited claims processing and integrated AI experiences to improve service and reduce costs.
Legislative Advocacy: Engaging with policymakers to expand HSA access and promote their role in addressing health care affordability.
Interest Rate Hedging: Executed U.S. treasury bond forward contracts to mitigate interest rate volatility on future HSA cash deposit contracts.
Regulatory Environment: Uncertainty in public policy and legislative outcomes, including potential changes to ACA subsidies and HSA eligibility, could impact the company's operations and strategic plans.
Affordability Challenges: Rising healthcare costs outpacing wage growth create affordability challenges for American families and employers, which could affect HSA adoption and usage.
Fraud Prevention: Although fraud costs are currently low, evolving threats necessitate ongoing investment in security measures, which could increase operational costs.
Interest Rate Volatility: Potential volatility in interest rates could impact custodial revenue and the effectiveness of interest rate hedges.
Competitive Pressures: The need to continually invest in technology, security, and marketing to maintain competitive advantage could strain resources and margins.
Revenue Expectations: For fiscal 2026, revenue is expected to range between $1.302 billion and $1.312 billion.
Net Income Projections: GAAP net income is projected to be between $197 million and $205 million, or $2.24 to $2.33 per share. Non-GAAP net income is expected to range from $341 million to $348 million, or $3.87 to $3.95 per share.
Adjusted EBITDA: Adjusted EBITDA is forecasted to be between $555 million and $565 million for fiscal 2026.
HSA Cash Yield: The average yield on HSA cash is expected to be approximately 3.54% for fiscal 2026.
Capital Return and Share Repurchases: The company plans to continue share repurchases under the remaining $259 million repurchase authorization and may reduce borrowings on its revolver during the fiscal year.
Investment in Technology and Security: Continued investment in technology and security is planned to enhance the member-first secure mobile experience and deliver innovative products across the platform.
HSA Adoption and ACA Exchanges: Investments in sales and marketing will be made to drive HSA adoption on the ACA exchanges.
Interest Rate Hedging: The company has entered into U.S. treasury bond forward contracts with a notional amount of approximately $2.3 billion, tied to basic rate contract maturities between January 2026 and August 2027, with a blended rate lock of 3.94%.
Share Repurchase Program: The company repurchased approximately $94 million of its outstanding shares during the quarter. Additionally, there is approximately $259 million remaining on the previously announced share repurchase authorization. The company expects to make additional share repurchases under this authorization during the fiscal year.
The earnings call summary and Q&A indicate positive financial performance, strategic HSA market expansion, and efficiency improvements through AI and automation. Despite competitive pressures, the company maintains high retention rates and leverages a strong enterprise pipeline. The Bronze plan expansion adds significant growth potential, supported by positive analyst sentiment. While management avoided some specifics, optimistic guidance and strategic investments in technology and shareholder returns bolster a positive outlook.
The earnings call indicates strong operational efficiency and strategic advancements, such as AI and mobile enhancements, HSA growth, and fraud prevention. Despite some unclear management responses, the overall sentiment is positive, with optimistic guidance and improved service margins. The Q&A highlights proactive legislative engagement and market opportunities, reinforcing a positive outlook. The absence of negative financial surprises or guidance cuts further supports a positive stock price movement.
The earnings call summary shows strong financial performance with significant revenue growth, increased gross profit margin, and a robust share repurchase plan. The Q&A section reveals management's optimism about the pipeline and successful fraud prevention, though some responses were vague. The raised guidance and record HSA assets further enhance the positive outlook. Given these factors, a positive stock price movement is likely, despite potential macroeconomic concerns.
The earnings call reveals solid financial performance with record custodial revenue growth and a significant increase in total revenue. The optimistic guidance for FY 2026, alongside a strong share repurchase plan, indicates confidence in future growth. Despite some challenges, such as increased service costs and competitive pressures, the company's strategic initiatives and legislative advocacy suggest a positive outlook. The Q&A section highlights management's commitment to addressing concerns and leveraging opportunities, further supporting a positive sentiment. Overall, these factors suggest a likely positive stock price movement in the near term.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
