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Investing.com -- Shares of Healthequity Inc (NASDAQ:HQY) climbed more than 3% in premarket trading Wednesday after the Draper, Utah-based firm topped Wall Street expectations for its second fiscal quarter and offered better-than-expected full-year earnings guidance.
The nation’s largest HSA custodian cited strong revenue growth, rising account volumes, and record margins as catalysts for the results.
The company reported adjusted earnings of $1.08 per share, up 26% from a year ago and well above analysts’ forecast of $0.92. Revenue climbed 9% to $325.8 million, also surpassing the consensus estimate of $320.74 million, driven by increased custodial, service, and interchange revenue.
HealthEquity’s net income rose 67% to $59.9 million, or $0.68 per diluted share, while adjusted EBITDA climbed 18% year-over-year to $151.1 million, well ahead of the Visible Alpha consensus of $135.6 million.
Commenting on the report, Bank of America analysts highlighted the "big EBITDA beat, supported by better service costs."
"Service costs came in ahead of our estimate by ~$8MM, likely reflecting some better-than-expected improvement in fraud costs in the quarter," they noted.
Gross margin reached a new high of 71%, helping adjusted EBITDA represent 46% of revenue, compared with 43% in the year-ago quarter.
“The HealthEquity team delivered continued momentum during our second quarter with strong 9% revenue growth, record gross margin of 71% and record adjusted EBITDA of $151 million,” said President and CEO Scott Cutler. He added, “We believe our outlook is even brighter with our national lawmakers providing the largest legislative expansion of HSAs since 2006.”
The company ended the quarter with 10 million HSAs, a 6% increase from last year, alongside 17.1 million total accounts including consumer-directed benefit plans. HSA assets reached $33.1 billion, up 12% year-over-year, split between $17.0 billion in HSA cash and $16.1 billion in investments.
HealthEquity now expects fiscal year 2026 adjusted EPS between $3.74 and $3.91, above the consensus of $3.73. Revenue is guided to a range of $1.29 billion to $1.31 billion, in line with expectations.
The company also repurchased 0.7 million shares for $66 million during the quarter, with $351.8 million remaining authorized for buybacks. Management reiterated its commitment to balancing growth investments with shareholder returns.
Investors appeared encouraged by the company’s continued execution across financial metrics and its exposure to growing HSA market tailwinds. As HealthEquity advances its technology and scales distribution, analysts see room for further share gains should legislative support and account adoption trends continue.
(Luke Juricic contributed to this report.)