HealthEquity, Inc.HQY shares have gained 15.7% in the past three months, putting the focus on whether improving fundamentals can support further upside. HSA accounts and assets advanced, second-quarter fiscal 2027 results topped expectations and margins expanded.
Management also raised fiscal 2027 revenue and adjusted EBITDA guidance. Still, cybersecurity litigation, regulatory inquiries, competitive pricing pressure and sensitivity of custodial economics to interest rates and contract renewals keep the risk-reward picture balanced after the recent advance.
HQY’s HSA Engine Keeps Building Scale
HealthEquity administered 10.7 million HSAs and $37.9 billion in HSA assets as of July 31, 2026. Those figures were up 8% and 14% year over year, respectively, reinforcing the scale of the company’s core HSA platform.
New HSAs from sales increased 24% in the fiscal second quarter. Client renewals remained on pace to exceed 90% for the year, supporting continued account growth through partner, direct and existing-client channels.
Image Source: Zacks Investment Research
HealthEquity’s Investment Balances Add Momentum
HSAs with investments rose 20% year over year to 939,000, while HSA investment assets increased 28% to $20.6 billion. The faster growth in invested assets points to greater use of the investment side of the platform.
Management said roughly 9% of HealthEquity’s HSA population was investing at quarter-end. Its recently launched SimplyInvest lineup has no administrative fee, giving the company another tool to encourage adoption as accounts mature.
HQY’s Earnings and Margins Strengthen the Setup
Adjusted earnings of $1.24 per share in the fiscal second quarter increased 14.8% year over year and beat the Zacks Consensus Estimate by 4.2%. Revenues rose 7.6% to $350.7 million and exceeded the consensus mark.
Gross margin expanded about 220 basis points to 73.5%, while operating margin improved about 60 basis points to 28.1%. Lower service costs from technology-enabled efficiencies supported the margin gains.
HealthEquity Raises Guidance as Efficiency Improves
HealthEquity raised fiscal 2027 revenue guidance to $1.411-$1.421 billion from $1.410-$1.420 billion. Adjusted EBITDA is now expected to be $628-$636 million, up from the prior $625-$633 million range.
AI resolved 85% of routine chat inquiries and contained 55% of card-related phone contacts in the latest quarter. Human-handled calls declined 25% year over year, while adjusted EBITDA margin reached 48%.
Image Source: Zacks Investment Research
HQY Still Faces Risks After the Recent Rally
The fiscal 2025 cybersecurity incident remains an overhang. HealthEquity is subject to a consolidated putative class action and regulatory inquiries, while the potential loss tied to the matters was not reasonably estimable. Custodial economics also remain sensitive to interest rates and contract renewals.
WEX Inc. WEX offers HSAs and other consumer-directed benefits and serves as an IRS-designated non-bank HSA custodian. UnitedHealth Group Incorporated UNH, through Optum Financial and Optum Bank, also operates at scale in health financial accounts. These alternatives underscore competition around pricing, products and partner relationships.
HQY’s Style Scores Support a Balanced View
The recent rally has support from rising HSA scale, deeper investment engagement, better quarterly profitability and higher guidance. The next test is whether HealthEquity can sustain those trends while managing cybersecurity, pricing and interest-rate risks.
HQY currently carries a Zacks Rank #3 (Hold). It has a Growth Score of B, Momentum Score of B and VGM Score of B, while its Value Score of C is less favorable. Style Scores complement the Zacks Rank, and A or B grades are generally more favorable than C. The combination supports a measured view rather than a top-ranked buy signal after the stock’s advance.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
WEX Inc. (WEX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.