A month has gone by since the last earnings report for HealthEquity (HQY). Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HealthEquity due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
HealthEquity Q1 Earnings and Revenues Miss Estimates
HealthEquity, Inc. reported adjusted earnings per share of 43 cents in first-quarter fiscal 2021, which missed the Zacks Consensus Estimate of 44 cents by 2.3%. The bottom line was flat on a year-over-year basis.
Revenues in Detail
The company generated revenues of $190 million, missing the Zacks Consensus Estimate by 1.3%. However, the figure skyrocketed 118% from the prior-year quarter.
HSA Member Detail
As of Apr 30, 2020, the total number of Health Savings Accounts (HSA), for which HealthEquity served as a non-bank custodian (HSA members), was 5.4 million, up 33% year over year.
Additionally, total Active HSA assets were $11.5 billion, up 38% year over year.
Total Accounts, including HSAs and complementary CDB accounts, came in at 12.7 million, up 169% year over year.
Service Revenues: At this segment, revenues totaled $111.3 million, up 315.3% from the year-ago figure.
Custodial Revenues: At this segment, revenues grew 11.9% year over year to $46.9 million.
Interchange Revenues: At this segment, revenues soared 73.8% year over year to $31.8 million.
HealthEquity generated gross profit of $108.1 million, up 87.1% from the year-ago quarter. Gross margin was 56.9% of net revenues, down 947 bps year over year.
Adjusted operating profit in the fiscal first quarter was $46.5 million, up 59.6% year over year. Adjusted operating margin totaled 24.5% in the quarter, contracting 901 bps year over year.
Due to uncertainty regarding the impact of the COVID-19 pandemic, the company is withdrawing its fiscal 2021 guidance.
For the fiscal second quarter, the company expects revenues between $168 million and $173 million. The Zacks Consensus Estimate for the same is pegged at $190.7 million.
Adjusted net income is projected between $17 million and $22 million.
Adjusted EPS is expected within 23-30 cents. The Zacks Consensus Estimate for earnings is pegged at 45 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -55.48% due to these changes.
At this time, HealthEquity has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise HealthEquity has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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