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HealthEquity Inc (HQY) Reports Robust Revenue Growth and Profitability in Q3 FY24

  • HealthEquity Inc (NASDAQ:HQY) revenue climbs 15% to $249.2 million in Q3 FY24.

  • Net income reaches $14.7 million, a significant turnaround from a net loss in Q3 FY23.

  • Adjusted EBITDA up by 30%, with the company acquiring BenefitWallet HSA portfolio.

  • Management projects revenue of $985 million to $995 million for FY ending January 31, 2024.

On December 5, 2023, HealthEquity Inc (NASDAQ:HQY) released its 8-K filing, showcasing a strong financial performance for the third quarter ended October 31, 2023. The company reported a 15% increase in revenue, reaching $249.2 million, and a significant improvement in net income, which stood at $14.7 million compared to a net loss of $1.6 million in the same quarter of the previous fiscal year.

Financial Highlights and Performance

HealthEquity Inc (NASDAQ:HQY) demonstrated robust growth across several financial metrics. The company's net income per diluted share was $0.17, a stark contrast to the net loss per diluted share of $0.02 in Q3 FY23. Non-GAAP net income also saw a substantial rise, increasing by 61% to $52.2 million, with non-GAAP net income per diluted share growing to $0.60 from $0.38 in the prior year's quarter.

Adjusted EBITDA for the quarter was impressive, totaling $95.6 million, marking a 30% increase from Q3 FY23. This figure represented 38% of revenue, up from 34% in the same quarter of the previous year. HealthEquity's management attributes this performance to the company's focus on meeting the needs of healthcare consumers, as emphasized by President and CEO Jon Kessler.

Operational Metrics and Future Outlook

The company's Health Savings Accounts (HSAs) grew by 8% year-over-year to 8.3 million, with HSA assets increasing by 12% to $22.6 billion. Total accounts, including HSAs and complementary Consumer-Directed Benefits (CDBs), reached 15.3 million, a 5% increase from Q3 FY23.

Looking ahead, HealthEquity Inc (NASDAQ:HQY) is optimistic about its fiscal year ending January 31, 2024, with revenue projections between $985 million and $995 million. The company anticipates net income to be between $34 million and $39 million, translating to $0.39 to $0.45 per diluted share. Non-GAAP net income is expected to be between $181 million and $188 million, resulting in non-GAAP net income per diluted share of $2.08 to $2.16. Adjusted EBITDA is forecasted to be between $350 million and $360 million.

Balance Sheet and Cash Flow Statements

The balance sheet of HealthEquity Inc (NASDAQ:HQY) remained strong, with total assets amounting to $3.09 billion. The company's cash and cash equivalents stood at $334.1 million, an increase from $254.3 million at the end of the previous fiscal year. Long-term debt, net of issuance costs, was reported at $874.3 million.

From a cash flow perspective, net cash provided by operating activities for the nine months ended October 31, 2023, was $165.8 million. The company invested $34.8 million in software and property and equipment, and used $51.2 million in financing activities, including principal payments on long-term debt.

Strategic Acquisitions and Market Position

HealthEquity Inc (NASDAQ:HQY) also announced the agreement to acquire the BenefitWallet HSA portfolio, which is expected to close in the first half of fiscal 2025. This strategic move is anticipated to further strengthen the company's market position as the nation's largest HSA custodian.

Investors and stakeholders can look forward to a conference call hosted by HealthEquity management to discuss these financial results and provide further insights into the company's strategy and outlook.

HealthEquity Inc (NASDAQ:HQY) continues to demonstrate its commitment to connecting health and wealth, providing value to its partners, clients, and shareholders. The company's financial results reflect a strong trajectory of growth and profitability, positioning it well for continued success in the dynamic healthcare savings space.

Explore the complete 8-K earnings release (here) from HealthEquity Inc for further details.

This article first appeared on GuruFocus.