Healthequity 2026 Q1 Earnings Beats Expectations as Net Income Soars 87%

Healthequity (HQY) reported its fiscal 2026 Q1 earnings on June 3rd, 2025. The company surpassed expectations with quarterly revenue reaching $330.84 million, exceeding the Street estimate of $321.17 million, and EPS of $0.97, beating the consensus estimate of $0.88. Management raised fiscal 2026 guidance, forecasting revenue between $1.285 billion and $1.305 billion, and adjusted EPS of $3.61 to $3.78, above previous projections. These results underscore HealthEquity's strong performance and its strategic initiatives aimed at enhancing member resources and expanding market opportunities.

Revenue
Healthequity achieved a 15% increase in total revenue for 2026 Q1, reaching $330.84 million compared to $287.60 million in 2025 Q1. Service revenue rose to $119.78 million, custodial revenue saw a significant leap to $156.46 million, and interchange revenue climbed to $54.60 million, showcasing robust growth across all segments.

Earnings/Net Income
Healthequity's EPS rose 87.9% to $0.62 in 2026 Q1 from $0.33 in 2025 Q1, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $53.91 million in 2026 Q1, marking 87.1% growth from $28.81 million in 2025 Q1. Notably, the EPS indicates strong financial performance and growth potential.

Post-Earnings Price Action Review
The strategy of buying HQY shares after a revenue miss and holding for 30 days resulted in disappointing performance. A backtest revealed a substantial loss of -36.20%, with an excess return of -115.12% and a CAGR of -8.64%. The strategy suffered from a high maximum drawdown of -51.29% and a low Sharpe ratio of -0.40, indicating elevated risk and negative returns. Investors experienced significant volatility, with the strategy underperforming across several key metrics. The data suggests that previous patterns of price recovery post-revenue miss were not reliable, highlighting the importance of re-evaluating investment strategies based on evolving market conditions.

CEO Commentary
"The HealthEquity team started fiscal 2026 with a strong first quarter that included record quarterly revenue, record Adjusted EBITDA, and increased guidance for the year," said Scott Cutler, President and CEO of HealthEquity. He emphasized enhancements to the member-first secure mobile experience aimed at strengthening the security of $31 billion in HSA assets while increasing member resources and reducing costs. Cutler also acknowledged the efforts of national leaders to empower healthcare consumers by expanding HSA benefits and eligibility for American families.

Guidance
Management expects revenues for the fiscal year ending January 31, 2026, to be between $1.285 billion and $1.305 billion. Net income is projected to be in the range of $173 million to $188 million, translating to $1.96 to $2.13 per diluted share. Non-GAAP net income is anticipated to be between $320 million and $335 million, resulting in non-GAAP net income per diluted share of $3.61 to $3.78. Adjusted EBITDA is forecasted to be between $530 million and $550 million.

Additional News
HealthEquity initiated a stock repurchase program, buying back 0.7 million shares for $60.3 million during Q1 2026, demonstrating confidence in future growth. The repurchase reflects strategic efforts to optimize capital structure and enhance shareholder value following a robust fiscal quarter. Additionally, HealthEquity welcomed new CSO Sunil, who leads the company's security and fraud team, a significant move following recent challenges in fraud detection. These developments align with HealthEquity’s objectives to reinforce operational efficiency and secure member assets, as part of their broader strategic goals.