Investing in HealthEquity (NASDAQ:HQY) Three Years Ago: A 94% Gain

HealthEquity, Inc. (NASDAQ: HQY), the nation's largest health savings account (HSA) custodian, has delivered impressive returns to investors over the past three years. Those who invested in the company in January 2022 have seen their shares appreciate by approximately 94%, outpacing the market return of 31% (not including dividends). This strong performance can be attributed to several key factors, including the company's robust financial performance, growth in HSA accounts and assets, and market leadership position.



HealthEquity's financial performance has been a significant driver of its stock price appreciation. The company has consistently reported strong revenue and earnings growth. In the fiscal year ended January 31, 2025, HealthEquity reported revenue of $1.19 billion, up from $1.165 billion the previous year, and adjusted EPS of $3.13, up from $2.98. This consistent improvement in financial performance has contributed to the company's strong stock performance.



Another key factor contributing to HealthEquity's stock price appreciation is the growth in HSA accounts and assets. As of January 31, 2025, HealthEquity managed approximately 9.8 million HSAs, up from 8.7 million the previous year, with HSA assets reaching approximately $31 billion, up from $25.2 billion. This growth reflects the increasing adoption of HSAs as long-term savings vehicles and the company's successful customer engagement and acquisition strategies.



HealthEquity's market leadership position in the HSA custodian landscape has also contributed to its stock price appreciation. The company's integrated network approach with over 200 partners creates significant barriers to entry for competitors while enabling efficient customer acquisition channels. The robust growth in both accounts and assets suggests successful execution of their distribution strategy through health plans, employers, and benefit advisors.

Investing in HealthEquity three years ago has delivered a significant gain for investors, driven by the company's strong financial performance, growth in HSA accounts and assets, and market leadership position. As the company continues to execute its growth strategy and expand its market share, investors can expect HealthEquity to remain a strong performer in the healthcare industry. However, it is essential to consider potential risks and challenges, such as competition and regulatory changes, when evaluating the company's future prospects.