HealthEquity's Q4 2025: Key Contradictions in HSA Expansion, Fraud Costs, and Client Retention

These are the key contradictions discussed in HealthEquity's latest 2025Q4 earnings call, specifically including: HSA Expansion Initiatives and Investment Priorities, Fraud Activity Costs and Service Margins, and Client Retention Rates:



Revenue and Service Performance:
- HealthEquity reported revenue of $124.2 million for Q4, up 19% year-over-year.
- The growth was driven by increases in service revenue, custodial revenue, and interchange revenue, supported by higher HSAs and Total Accounts.

HSA and Member Growth:
- HealthEquity ended Q4 with 17 million Total Accounts, including 9.9 million HSAs holding $32 billion in HSA Assets.
- The growth in HSA Assets by 27% year-over-year was supported by new HSA account openings and increased member engagement.

Interchange and Custodial Revenue:
- Interchange revenue grew 13% to $43.5 million, while custodial revenue increased 37% to $144.1 million.
- This was attributed to increased member contributions and distributions, and a shift toward enhanced rate placements for HSA cash.

Service Cost Challenges and Fraud Activity:
- Due to excess service costs, HealthEquity's gross profit was reduced by approximately $17 million in Q4.
- This was primarily due to increased cyber threats and fraud attacks, requiring reimbursement and additional service center resources.