U.S. markets closed
  • S&P 500

    3,870.29
    -31.53 (-0.81%)
     
  • Dow 30

    31,391.52
    -143.99 (-0.46%)
     
  • Nasdaq

    13,358.79
    -230.04 (-1.69%)
     
  • Russell 2000

    2,231.51
    -43.81 (-1.93%)
     
  • Crude Oil

    59.62
    -1.02 (-1.68%)
     
  • Gold

    1,732.90
    +9.90 (+0.57%)
     
  • Silver

    26.83
    +0.15 (+0.55%)
     
  • EUR/USD

    1.2092
    +0.0032 (+0.27%)
     
  • 10-Yr Bond

    1.4150
    -0.0310 (-2.14%)
     
  • GBP/USD

    1.3956
    +0.0035 (+0.25%)
     
  • USD/JPY

    106.7460
    +0.0160 (+0.01%)
     
  • BTC-USD

    47,840.23
    -913.98 (-1.87%)
     
  • CMC Crypto 200

    956.08
    -30.57 (-3.10%)
     
  • FTSE 100

    6,613.75
    +25.22 (+0.38%)
     
  • Nikkei 225

    29,408.17
    -255.33 (-0.86%)
     

HealthEquity (HQY) Q3 Earnings and Revenues Beat Estimates

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

HealthEquity, Inc. HQY reported adjusted earnings per share (EPS) of 41 cents in third-quarter fiscal 2021, which beat the Zacks Consensus Estimate of 35 cents by 17.1%. However, the bottom line fell 4.7% on a year-over-year basis.

Revenues in Detail

The company generated revenues of $179.4 million, outpacing the Zacks Consensus Estimate by 1.9%. Also the top line rose 14.2% from the prior-year quarter.

HSA Details

As of Oct  31, 2020, the total number of Health Savings Accounts (HSA) for which HealthEquity served as a non-bank custodian (HSA members), came in at 5.5 million, up 9% year over year.

Additionally, total Active HSA assets were $12.4 billion, up 19% year over year.

Total Accounts including HSAs and complementary consumer direct benefits (CDB) accounts summed 12.5 million, flat year over year.

Segmental Performance

Service Revenues: Revenues of $104.6 million were up 19.4% from the year-ago figure.

Custodial Revenues: Revenues grew 3.4% year over year to $48.5  million.

Interchange Revenues: Revenues increased 16.4% year over year to $26.2 million.

Margin Details

HealthEquity generated gross profit of $104.6 million, up 8.8% from the year-ago quarter. Gross margin was 58.3% of net revenues, down 282 basis points (bps) year over year.

Adjusted operating profit in the fiscal third quarter was $38.8 million, down 4.5% year over year. Adjusted operating margin was 21.6% in the period, contracting 423 bps year over year.

 

HealthEquity, Inc. Price, Consensus and EPS Surprise

HealthEquity, Inc. Price, Consensus and EPS Surprise
HealthEquity, Inc. Price, Consensus and EPS Surprise

 

HealthEquity, Inc. price-consensus-eps-surprise-chart | HealthEquity, Inc. Quote

 

Financial Position

The company exited the fiscal third quarter with cash and cash equivalents of $299.4 million compared with $268.9 million at the end of the fiscal second quarter.

Cumulative cash flow from operating activities in the third quarter came in at $120.7 million, up from $74.1 million in the year-ago period.

Full-Fiscal View

For fiscal 2021, revenues are projected within $725-$731 million (up from the previously guided range of $720-$730 million). The Zacks Consensus Estimate for the same is pegged at $728.2 million.

Adjusted earnings per share are expected within $1.55-$1.61 (up from the earlier issued range of $1.48-$1.58). The Zacks Consensus Estimate for the same stands at $1.56.

Summing Up

HealthEquity exited third-quarter fiscal 2021 on a strong note. The company witnessed a sturdy segmental performance in the quarter under review. Notably, solid growth in HSAs and custodial assets bolstered the top line. In addition to HSA, the company offers health reimbursement arrangement to regional employers. HealthEquity achieved $55 million in run rate synergies by the end of the fiscal third quarter from its acquisition of WageWorks, which was completed in August 2019.

However, a significant drop in adjusted operating and gross margin raises concern. The company also faces stiff competition in the Medical Services market. HealthEquity is required to comply with the strict treasury regulations formulated by the Internal Revenue Service (IRS).

Zacks Rank and Key Picks

HealthEquity currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that already announced quarterly results are Thermo Fisher Scientific Inc. TMO, Align Technology, Inc. ALGN and BioRad Laboratories, Inc. BIO, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion also surpassed the consensus mark by 10%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which trumped the Zacks Consensus Estimate by 281.4%. Further, revenues of $734.1 million outpaced the consensus mark by 38%.

BioRad reported third-quarter 2020 adjusted EPS of $3, which topped the Zacks Consensus Estimate by 62.2%. Revenues of $647.3 million in the quarter too exceeded the Zacks Consensus Estimate by 14.5%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
BioRad Laboratories, Inc. (BIO) : Free Stock Analysis Report
 
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research