Healthequity 2026 Q3 Earnings Record Net Income Surges 806%

Healthequity (HQY) reported fiscal 2026 Q3 earnings on Dec 3, 2025, surpassing expectations with a 7.2% revenue increase and a 806% year-over-year jump in net income. The company raised FY 2026 revenue guidance to $1.302–$1.312 billion, reflecting strong demand for health savings accounts (HSAs) and margin expansion.

Revenue

Service revenue led the growth at $120.29 million, followed by Custodial revenue of $159.07 million, with Interchange revenue contributing $42.81 million. Total revenue reached $322.16 million, a 7.2% increase from $300.43 million in the prior year, driven by expanded HSA adoption and platform enhancements.

Earnings/Net Income

Healthequity’s EPS surged 757.1% to $0.60, while net income hit a record $51.69 million—a 806.4% increase from $5.70 million. This marked the highest Q3 net income in 13 years, underscoring robust profitability and operational efficiency.

Price Action

The stock edged down 0.24% in the latest trading day, dropped 6.45% for the week, but rose 4.29% month-to-date.

Post-Earnings Price Action Review

The strategy of buying Healthequity shares 30 days after earnings reports with raised revenue forecasts showed a moderate return over three years, with a CAGR of 16.75% and a Sharpe ratio of 0.45. However, it underperformed the benchmark by 14.91%, and while the maximum drawdown was zero, the overall performance lagged slightly behind the market average.

CEO Commentary

CEO Scott Cutler highlighted 7% revenue growth, 806% net income increase, and 20% adjusted EBITDA growth, driven by HSA adoption and AI-driven efficiencies. Strategic priorities include expanding HSA access via a direct enrollment platform for ACA Bronze plan participants, enhancing the HealthEquity Marketplace for health solutions, and leveraging AI for operational efficiency. Cutler expressed optimism about Q4, citing strong employer demand for HSAs and ongoing investments in security and retail HSA growth.

Guidance

HealthEquity raised FY 2026 guidance to revenue of $1.302B–$1.312B, non-GAAP EPS of $3.87–$3.95, and adjusted EBITDA of $555M–$565M. The company also returned $93.7 million to shareholders via stock repurchases under its remaining $259M authorization and emphasized confidence in executing its flywheel strategy amid macroeconomic and legislative tailwinds.

Additional News

Healthequity announced a $93.7 million share repurchase program in Q3, reflecting strong cash flow generation ($339M year-to-date). The company also launched a GLP-1 platform and a direct HSA enrollment service, expanding access to health solutions and ACA exchange growth. CEO Scott Cutler emphasized strategic investments in AI to enhance member experience and operational efficiency, aligning with legislative momentum for consumer-directed healthcare.

Financial Highlights

HealthEquity’s Q3 2026 EPS of $1.01 beat forecasts by 10.99%, while revenue grew 7% to $322.2 million. Adjusted EBITDA surged 20% to $141.8 million, and non-GAAP net income rose 26% to $87.7 million. The company’s gross margin expanded to 71%, up from 66% last year, driven by cost reductions and AI-powered efficiencies.

Market Reaction

Post-earnings, the stock rose 0.11% in after-hours trading, reflecting stable investor sentiment. Analysts maintain a "Buy" consensus, with a 1.53 rating (1=Strong Buy), and a 12-month price target of $119.17, implying a 16.37% upside.

Peer Comparison

HealthEquity outperformed peers in return on equity (2.8%) and gross profit ($232.59M), though revenue growth (8.64%) lagged behind Molina Healthcare’s 11%. The company’s strong net margin (18.37%) and low debt-to-equity ratio (0.49) further underscore its financial health.

Strategic Outlook

HealthEquity plans to expand its HealthEquity Marketplace for GLP-1 programs and other health solutions, while leveraging AI to personalize member experiences. The company also aims to grow retail HSA adoption and enhance fraud prevention, aligning with long-term trends in consumer-directed healthcare.

Technical Analysis

Short-term technical indicators suggest a "Strong Sell," while long-term trends lean toward "Strong Buy." The stock’s 52-week range of $74.07–$116.65 indicates moderate volatility, with analysts projecting continued growth in HSA adoption and margin expansion.