HealthEquity Beats Q3 Estimates, Boosts Buybacks by $93.7M
The health savings account administrator posted a 20% jump in adjusted EBITDA, signaling robust growth in consumer-directed benefits.
HealthEquity, Inc. (NASDAQ: HQY) reported stronger-than-expected third-quarter financial results after the market close on Tuesday, driven by solid growth in its health savings account (HSA) assets and a significant increase in profitability. The company also demonstrated confidence in its financial position by returning nearly $94 million to shareholders through an accelerated stock repurchase program.
The Draper, Utah-based administrator of HSAs and other consumer-directed benefits announced non-GAAP earnings of $1.01 per share, decisively beating Wall Street's consensus estimate of $0.91. Revenue for the quarter ending October 31, 2025, came in at $322.2 million, a slight beat over expectations and marking a 7% increase from the same period last year. Following the announcement, shares of HealthEquity were trading at $98.64 in a slight downturn of 0.24%.
Beneath the headline numbers, the company's operational metrics revealed sustained momentum. Adjusted EBITDA grew 20% year-over-year, a key indicator of underlying profitability. Total HSA assets, a critical measure of the company's scale and market leadership, expanded by 15% to reach $34.4 billion. This growth underscores the increasing adoption of consumer-driven health plans by employers and individuals navigating rising healthcare costs.
In a move reflecting its strong cash flow and positive outlook, HealthEquity announced it had repurchased $93.7 million of its common stock during the quarter. Such buybacks are often interpreted by investors as a signal that management believes the company's shares are undervalued and is committed to enhancing shareholder value.
"Our team delivered another quarter of double-digit growth in revenue, profitability, and HSA assets, while welcoming a record number of new HSA members to our platform," a company spokesperson stated in the quarterly earnings release. The results highlight the company's successful integration of past acquisitions and its ability to scale its technology-driven platform effectively.
Despite the strong report, HealthEquity's stock saw a modest pullback in the trading session following the release. However, the long-term view from market analysts remains overwhelmingly positive. According to market data, the consensus 12-month price target for HQY sits at approximately $120.33, suggesting a potential upside of over 20% from its current levels. Of the 15 analysts covering the stock, 13 rate it as a 'Buy' or 'Strong Buy,' with only two maintaining a 'Hold' rating.
The company is a key player in the growing market for consumer-directed benefits, which give employees more control over their healthcare spending. As healthcare costs continue to rise, HSAs have become an increasingly popular tool for both saving for medical expenses and long-term investment, a trend that provides a significant tailwind for HealthEquity's business model.
Investors will be closely watching for the company's forward guidance and management's commentary on its upcoming investor call for insights into its strategy for maintaining growth, managing custodial cash yields in the current interest rate environment, and capitalizing on the open enrollment season.