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What this page is: Delvantic's full research page for HealthEquity Inc. (HQY) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.
Our current read (analysis of 2026-08-23): Designation Watch · Gem Score -7 (−100…+100 Quality+Value blend) · Quality 67 · Value -67 · Sentiment 6 (timing only, not weighted) · Composite fair value $75.43 vs $100.99 at analysis
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HealthEquity Inc.
HQY NASDAQHealthEquity Inc. is a technology-enabled services platform that empowers consumers, employers, and health plans to manage healthcare savings and spending decisions. It specializes in administering health savings accounts (HSAs), serving as a non-bank HSA trustee designated by the IRS, along with flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and pre-tax commuter benefits. The company provides investment platforms, online automated advisory services, payment processing, personalized benefit information, and wellness incentives to help users grow tax-advantaged savings. HealthEquity Inc. also offers Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation services and consumer-directed benefits, facilitating efficient healthcare expense management. Its integrated solutions support a wide range of clients in the healthcare and financial services sectors, streamlining benefits administration and enhancing consumer control over health-related finances. Founded in 2002 and headquartered in Draper, Utah, HealthEquity Inc. plays a key role in the growing market for consumer-driven healthcare accounts.
Price Overview
Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 2.46
Total Equity: $2.11B
Shares: 87,473,000
Total Debt: $957.38M
Cash: $318.93M
EBITDA: $477.11M
Total Debt: $957.38M
Cash: $318.93M
Revenue: $1.31B
Revenue: $1.31B
Revenue: $1.31B
Total Equity: $2.11B
Tax Rate: 22.4%
Equity: $2.11B
Total Debt: $957.38M
Cash: $318.93M
Current Liabilities: $156.85M
Long-Term Debt: $957.38M
Total Debt: $957.38M
Total Equity: $2.11B
Shares: 87,473,000
Shares: 87,473,000
CapEx: -$1.97M
Shares: 87,473,000
Stock Price: $100.99
Net Income: $215.20M
Industry Benchmarks
Income Statement (Annual)
Last updated: Jul 30, 2026 7:23pm (24d ago)| Metric | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Revenue | $756.6M | $861.7M | $999.6M | $1.2B | $1.3B |
| Cost of Revenue | $332.9M | $371.7M | $377.0M | $422.5M | $400.3M |
| Gross Profit | $423.7M | $490.1M | $622.6M | $777.3M | $913.1M |
| Operating Expenses | $447.9M | $481.0M | $504.9M | $614.9M | $590.7M |
| Operating Income | -$24.2M | $9.1M | $117.7M | $162.3M | $322.5M |
| Net Income | -$44.3M | -$26.1M | $55.7M | $96.7M | $215.2M |
| EBITDA | $113.0M | $170.3M | $270.8M | $324.8M | $477.1M |
| EPS | $-0.53 | $-0.31 | $0.65 | $1.11 | $2.50 |
| EPS (Diluted) | $-0.53 | $-0.31 | $0.64 | $1.09 | $2.46 |
Balance Sheet (Annual)
Last updated: Jul 30, 2026 6:59pm (24d ago)| Metric | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Cash & Equivalents | $225.4M | $254.3M | $404.0M | $295.9M | $318.9M |
| Total Current Assets | $351.3M | $382.9M | $557.4M | $477.7M | $512.3M |
| Total Assets | $3.1B | $3.1B | $3.2B | $3.4B | $3.4B |
| Current Liabilities | $153.2M | $131.1M | $117.1M | $156.3M | $156.9M |
| Long-Term Debt | $922.1M | $907.8M | $875.0M | $1.1B | $957.4M |
| Total Liabilities | $1.3B | $1.2B | $1.1B | $1.3B | $1.3B |
| Total Equity | $1.9B | $1.9B | $2.0B | $2.1B | $2.1B |
| Retained Earnings | $176.1M | $149.9M | $205.6M | $209.3M | $195.9M |
Cash Flow (Annual)
Last updated: Jul 30, 2026 7:23pm (24d ago)| Metric | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Operating Cash Flow | $141.0M | $150.7M | $242.8M | $339.9M | $457.1M |
| Capital Expenditure | -$8.9M | -$3.4M | -$1.7M | -$2.1M | -$2.0M |
| Free Cash Flow | $132.1M | $147.3M | $241.1M | $337.8M | $455.1M |
| Acquisitions (net) | -$504.5M | $0 | $0 | — | — |
| Net Debt Issued / (Repaid) | -$53.1M | -$8.8M | -$54.4M | $175.0M | -$100.0M |
| Dividends Paid | — | — | — | — | — |
| Stock Buybacks | — | $0 | $0 | -$121.5M | -$299.3M |
| Net Change in Cash | -$103.4M | $28.9M | $149.7M | -$108.0M | $23.0M |
Growth Trends (YoY %)
Last updated: Jul 30, 2026 7:23pm (24d ago)| Metric | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue Growth | +13.9% | +16.0% | +20.0% | +9.5% |
| Gross Profit Growth | +15.7% | +27.0% | +24.8% | +17.5% |
| Operating Income Growth | +137.4% | +1,199.5% | +37.9% | +98.6% |
| Net Income Growth | +41.0% | +313.1% | +73.6% | +122.5% |
| EBITDA Growth | +50.7% | +59.0% | +19.9% | +46.9% |
Deep Analysis
Risk : Reward — if the last quarter repeats
Live · as of 2026-08-19 08:59Even the bull case prices 41% below today — the ratio here measures the model-vs-market gap, not payoff odds. Another quarter like the worst recent one costs 56%.
| Case | Growth | Margin | Fair value | vs price ($100.99) |
|---|---|---|---|---|
| Bull — recovery | +15% | 19.8% | $59.78 | -41% |
| Base — stabilizes | +10% | 17.3% | $44.81 | -56% |
| Bear — keeps slipping | +5% | 14.7% | $32.87 | -67% |
| Stress — last quarter repeats | +7% | 19.0% | $44.45 | -56% |
Narrative Economics
market-narrative step).
Claude Reading
Looking at the raw numbers first: HQY has genuinely inflected. Annual revenue grew from $756M (FY22) to $1.31B (FY26) — a 14.6% CAGR — but the more relevant fact is operating income going from -$24M to $322M in four years. That's not scale leverage, that's a business finding its unit economics. FCF hit $455M on $2M capex — this is an asset-light custodial float business, and the 69.5% gross margin confirms it. Q1 FY27 (April 2026) at $354.6M revenue and 19.6% net margin is the best quarter in the file. On $455M of FCF, the $8.44B market cap is 18.5x FCF — not the 41x P/E screen. That's the number that matters.
Now, the models. The synthesis verdict of $81.64 fair value (-19% downside) leans heavily on DCF composite skepticism, and Market Forces calls the 13.8% growth projection "unjustifiably optimistic" while simultaneously acknowledging interest-rate tailwinds. I think this is where the prior work is internally inconsistent: HQY's float economics benefit from higher rates on custodial cash, and yes that reverses, but the $455M FCF is being generated *now* at a normalized rate environment, not at ZIRP peak. The Market Forces claim of "losing competitive ground" is asserted without evidence in the file — HSA account growth and AUM per account are the KPIs that would confirm or refute this, and they're absent. I'd downweight that signal. The Narrative layer's framing ("15–25% above intrinsic value") is more honest: this is a good business priced for continued execution, not a mania.
The contrarian case that actually has teeth isn't "commoditization" — it's rate sensitivity and growth deceleration together. Recent revenue YoY is 9.5%, meaningfully below the 14.6% four-year CAGR, and Q3 FY26 revenue ($322M) was *below* Q2 FY26 ($325.8M) and Q1 FY26 ($330.8M) before reaccelerating in Q4 and Q1 FY27. That sequential softness in mid-2025 is the tell — if custodial yield compresses as the Fed cuts, the interchange/service fee mix has to carry more weight, and that piece grows with account count, which is maturing. The 41x P/E only pencils if you believe FY27 earnings scale another 30%+ off the $215M FY26 base. Possible, but Q1 FY27 net income of $69.4M annualized is ~$278M — a 29% jump, which would justify current multiples but leaves no margin for error. Insider activity is all small S-Sales and F-InKind tax withholding — genuinely neutral, no signal either way, but note zero open-market buying at $101.
Where I land: I partially agree with the synthesis but think $81 fair value is too punitive given the FCF trajectory and the demonstrated operating leverage (op margin went from -3% to 24.6% in four years — that's not "mature earner," that's still-inflecting earner, and the classification model is arguably mislabeling this). At 20x FCF of $455M, you get ~$9.1B or ~$109/share — approximately fair. At 25x on a $500M forward FCF assumption, ~$149. The bear case pins it at 15x FCF or ~$82, which matches the synthesis but requires assuming FCF flatlines or declines. Given the Q1 FY27 print showing reacceleration and the debt/equity of 0.45 with $319M cash offering flexibility, I think fair value is closer to $95–105 than $81 — i.e., roughly where it trades. The 24% premium the narrative layer identifies is more like a 5–10% premium in my read, and it's earned by the FCF conversion, not by story. Not a screaming buy at $101, not a short. If it dips to $85 on a rate-cut narrative panic about float income, that's the entry. At $101, hold or trim if overweight, don't chase.
GPT Reading
What stands out is that HealthEquity is no longer a turnaround story; it is already a scaled cash machine, and the market knows it. Revenue has grown from $756.6M in FY2022 to $1.31B in FY2026, a solid 14%-15% CAGR, but the bigger story is operating leverage: operating income went from -$24.2M to $322.5M over that span, and net income from -$44.3M to $215.2M. The quarterly path reinforces that this is not a one-off. Over the last eight quarters, revenue has held in a tight but upward band from $299.9M to $354.6M, while net margin improved from 1.9% in the October 2024 quarter to 19.6% most recently. That is real quality improvement, not just accounting noise. Cash generation is even stronger than GAAP suggests: FY2026 operating cash flow was $457.1M and free cash flow $455.1M on just $2.0M of capex, implying a 34.7% FCF margin on revenue. For a business with current ratio above 3x and net debt of roughly $638M against $2.11B of equity, the balance sheet is not pristine but is comfortably manageable.
The problem is price. At $100.99, the stock is capitalized at $8.44B, about 6.4x trailing revenue and roughly 39x trailing earnings using the stated market cap and FY2026 net income. That is a premium multiple for a business whose latest annual revenue growth was only about 9% ($1.20B to $1.31B), and whose most recent quarter grew 7.2% year over year ($354.6M versus $330.8M). The recent earnings growth looks explosive because margins have normalized upward, but once you annualize the latest quarter’s $69.4M of net income you get about $278M of run-rate earnings; even on that more favorable base the stock is still around 30x earnings. For a company that increasingly looks like a mature transaction-and-custody platform rather than a software disruptor, that feels full. The valuation can work if double-digit revenue growth reaccelerates or if margins keep climbing meaningfully above the current 16%-20% net range, but the raw numbers today say most of the easy rerating has already happened.
I also think there is a tension in the business mix that the headline profitability can hide. This is a company with very high gross margins, almost no capex, and excellent cash conversion, which deserves a premium. But the quarterly revenue progression is not that of an early-stage compounder; it is steady, incremental, and increasingly dependent on scale economics rather than top-line acceleration. The market appears to be valuing it as though both secular HSA growth and further margin expansion are still in front of it. Maybe they are, but when annual operating margin is already 24.6% and FCF margin is mid-30s, a lot of the “better business model” discovery has already been monetized in the stock. The small insider sales do not alarm me, but they also do nothing to counter the idea that management is not seeing obvious mispricing at these levels.
The best argument against my cautious read is straightforward: this company may deserve to look expensive because the accounting understates the durability of the economics. A business that converts $1.31B of revenue into $455.1M of free cash flow, with negligible capex and improving margins, can compound value even without fast revenue growth. If the latest quarter is the new baseline, annualized net income near $275M-$280M would bring the P/E down quickly, and if operating cash flow pushes toward $500M+ the EV/FCF math becomes much more tolerable than EV/revenue suggests. There is also a case that the October 2024 quarter’s 1.9% margin was the anomaly, not the recent 15%-20% range, and that the business is still harvesting integration and scale benefits. On that view, paying around 20x EBITDA is not absurd for a dominant, sticky infrastructure asset in a category with long secular tailwinds.
What would change my mind is evidence that growth is reaccelerating without sacrificing the new margin structure. If HealthEquity can post a few quarters of revenue above $365M-$375M with year-over-year growth back into the low-to-mid teens while sustaining net margins above 17%, then the current price would look less demanding and I would be more constructive. I would also soften if annual free cash flow moves materially above $500M while debt trends down from $957.4M, because that would validate the premium through balance-sheet deleveraging and owner earnings power. Conversely, if quarterly revenue stays stuck in the low-single-digit to high-single-digit growth range while margins flatten, the stock should not hold a 30x-40x earnings frame.
Grok Reading
The numbers tell a completed turnaround more than an open-ended growth story. HealthEquity went from operating losses and negative net income in FY2022–23 to $322.5M of operating income and $215.2M of net income on $1.31B of revenue in the year ended January 2026, with gross margin at 69.5%, operating margin at 24.6%, and free cash flow of $455M against essentially zero maintenance capex. That is a genuine scale-leverage event in HSA custody and administration. What matters now is the slope after the inflection: trailing revenue CAGR of 14.6% has already cooled to roughly 9–10% year-over-year in the recent prints ($354.6M vs $330.8M a year earlier), while the market still capitalizes the equity at 41x trailing earnings, 6.7x sales, and 19.6x EV/EBITDA. The $8.44B enterprise is therefore paying a growth-stock multiple for what has become a mid-teens-at-best compounder whose easiest margin gains are behind it. ROE of 10.2% and ROIC of 9.1% do not justify a 4.2x book or a 41x earnings multiple unless the market is underwriting another multi-year step-function in either volume or take-rate that the recent quarterly trajectory does not yet show.
Cash generation is the cleanest part of the ledger and the main reason the stock is not a short. Free-cash-flow conversion is exceptional—FCF roughly double reported net income—and the balance sheet is serviceable at 0.45x debt-to-equity with $319M of cash against $957M of debt and a 3.3 current ratio. The business is asset-light, sticky, and benefits from the structural shift toward high-deductible plans and the quasi-oligopoly position as a scaled non-bank HSA trustee. Those are real economic moats. They are not, however, expanding moats at the current price: at ~18.5x trailing FCF the multiple is only reasonable if mid-teens growth and further margin accretion both materialize; the last four quarters show revenue growth decelerating and net margins oscillating in the mid-to-high teens rather than marching higher in a straight line. Interest-rate float on custodial balances has been a silent tailwind through the tightening cycle; that support is symmetrical and will reverse when policy rates fall, compressing the very earnings power the 41x multiple is capitalizing.
The valuation synthesis fair value near $82 and the “fully priced” label are directionally correct, even if the precise DCF can be quibbled with. A smart opponent would correctly note that annualizing the latest quarter’s $69.4M of net income implies a ~$278M run-rate and a forward P/E closer to 30x, that FCF yield is still above 5%, and that HSA assets and account growth retain multi-year secular runway as healthcare cost-shifting continues. They would also argue that 24–25% operating margins leave room to push toward 28–30% with incremental scale, and that the platform-monopoly narrative is at least partly earned rather than pure story. I weigh those points as real but already in the price: the stock is already discounting sustained mid-teens earnings growth and stable-to-rising float income. When revenue is printing high-single-digit to low-double-digit growth and the earnings CAGR of 96% is almost entirely a low-base artifact, paying a 24% premium to even an optimistic cash-flow value leaves asymmetric downside if growth settles at 8–10% or if net interest margins on HSA deposits compress.
I would reverse to a neutral or constructive stance if the next two quarters reaccelerate revenue above 14% year-over-year while holding operating margin at or above 25%, or if management demonstrates that custodial yield compression is being more than offset by fee and AUM growth per account. Conversely, two consecutive quarters of revenue growth at or below 7% combined with any visible decline in net interest contribution would confirm the multiple is simply too high and push fair value back toward the mid-70s.
Big-3 Panel — where each AI stands
Advanced Analysis Forensic deep-dive · separate lenses
The trajectory is emphatic: revenue compounded from 756.6M in FY22 to 1.31B in FY26 (about 15% CAGR), gross margin expanded from 56% to 69.5%, and operating margin swung from -3.2% to 24.6%. Net income moved from -44.3M to 215.2M and FCF from 132M to 455M in the same window - that is genuine operating leverage on a recurring HSA custody model that benefits from interest on custodial deposits. Earnings quality reads clean: accruals are -6.4% of assets (conservative), Beneish M at -2.78 and Altman Z at 4.89 are in safe zones. The one flag - OCF/NI at 0.21x - looks like a mechanical artifact of how custodial deposit flows hit cash-flow classification rather than an earnings-quality red flag, given 455M FCF against 215M net income. Capital discipline is respectable for a tech-adjacent name: diluted shares grew only 1.3% CAGR (83.1M to 87.5M), SBC is 5.6% of revenue, and buybacks cover 116% of SBC, so per-share value is being protected. The blemish is the balance sheet: 318.9M cash against net debt of 638.5M means the company is self-funding via 455M FCF but has no cushion. Insider tape is neutral to mildly negative - only sales and tax-withholding, no open-market buys - but volumes are small and typical for a mature-earner.
Verify before trusting this (6)
- Reconcile the 0.21x OCF/NI ratio - confirm whether custodial deposit flows are inflating or distorting reported OCF vs the 455M FCF figure
- Disclosed sensitivity of custodial-cash interest income to Fed funds - what share of FY26 revenue and operating profit is float income
- Debt maturity schedule and covenants on the 638M net debt position
- Organic vs acquired revenue growth (WageWorks integration status) and any remaining integration liabilities
- Customer/employer concentration in the HSA book
- SBC trajectory as a percent of revenue and buyback authorization remaining
The composite fair value of $76.80 and signal-adjusted $81.64 both sit roughly 19-24% below the $100.99 print, and the underlying methods disagree sharply: DCF says $107 (essentially the current price, and dependent on perpetual high growth), anchored P/E says $66, and the EPV floor is only $27. The wide dispersion tells me the market is paying for the optimistic DCF scenario while ignoring that a normalized-earnings anchor implies a stock in the mid-60s. This is a strong business (quality 67, ~25% op margin, $455M FCF on $1.31B revenue), which justifies a premium to EPV and anchored-PE, but not a premium ON TOP OF an already-generous DCF. What has to go right to justify $101: sustained double-digit HSA asset growth, continued interest-rate tailwinds on custodial float, and margin expansion despite maturing penetration. The bear case (HSA penetration maturing, price competition, rate normalization pressuring float income) is plausible enough that paying a 24% premium to composite FV is not compensated. Verdict: fairly-to-fully valued leaning rich - a fine business, wrong price.
Verify before trusting this (4)
- Custodial-cash yield sensitivity and duration in the next 10-Q - how much of EBIT is float income exposed to Fed cuts
- HSA account and asset growth deceleration trend vs guidance
- Net new account economics and any pricing/fee pressure commentary on the call
- Debt paydown pace and interest expense trajectory
The market is in a stress regime (VIX 20.7, S&P -3.9% off highs, 10y at 4.61%) but HQY's 0.21 beta neutralizes most of that pressure. This is a defensive, healthcare-infrastructure name that historically absorbs risk-off tape well; the macro headwind that mauls high-beta story stocks is a light crosswind here. Sector (Health Information Services) is not in the current firing line of any active rotation. The active narrative is a platform-monopoly framing (IRS non-bank trustee, HSA rails) with moderate intensity, moderate durability, and low cult - meaning the story supports the price but is not generating fresh buying pressure. The bear counter-narrative (maturing penetration, commoditized admin, premium to DCF) is credible and quietly gaining airtime as HSA growth decelerates. Momentum is positive on the long arc (14.6% CAGR, +10.8pp over 3y) but the recent 9.5% run is trailing the long-term rate - a subtle sign the tape is losing enthusiasm for the name even as it holds up. Net: macro pressure is muted by low beta, narrative is neither breaking nor accelerating, and there is no catalyst forcing a re-rate either way.
Verify before trusting this (4)
- Quarterly HSA account growth and custodial AUM print - any deceleration feeds the bear narrative
- Any competitive move from Fidelity or Optum in HSA admin that cracks the trustee-moat story
- Sector rotation signals: if defensives get bid in continued stress tape, HQY should catch flows
- Analyst target revision trend - a wave of cuts would confirm narrative fade
This lens hasn't been run for this ticker yet.
When we made this prediction on Jul 31, 2026, HQY was $100.99. We expect it to be $91.00 by Jan 2027, and we consider it great value under $78.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Jul 31, 2026.
Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.