📊 HQY Key Takeaways
Is Healthequity, Inc.. (HQY) a Good Investment?
HealthEquity demonstrates exceptional operational quality with 72% gross margins, 29% operating margins, and robust 27% free cash flow margins, indicating a capital-efficient, cash-generative business model. Strong liquidity (3.44x current ratio), manageable leverage (0.46x debt/equity), and solid revenue growth (+9.5% YoY) support the fundamentals. However, concerning low ROE (3.4%) and ROA (2.1%) suggest either recent acquisitive growth still integrating or capital inefficiency that warrants monitoring.
HealthEquity shows strong, capital-light profitability with 69.5% gross margin, 24.6% operating margin, and outstanding 34.7% FCF margin, alongside robust liquidity and moderate leverage. Earnings accelerated sharply on steady 9.5% revenue growth, reflecting operating leverage and disciplined cost structure. Key risk is profit sensitivity to interest-rate-driven custodial yields, which could moderate from current levels.
Healthequity, Inc.. Key Strengths (HQY)
- Exceptional profitability: 72.3% gross margin and 29% operating margin reflect strong pricing power and operational leverage
- Outstanding free cash flow generation: 27.4% FCF margin with minimal capex shows asset-light, cash-generative business model
- Excellent financial flexibility: 3.44x liquidity ratio, $265.4M cash position, and 8.7x interest coverage provide substantial financial cushion
- Solid revenue growth momentum at 9.5% YoY with strong EPS growth acceleration
- Conservative debt levels with 0.46x debt-to-equity ratio enabling future financial flexibility
- High and improving profitability (24.6% operating margin, 16.4% net margin)
- Exceptional cash generation and minimal capex (34.7% FCF margin)
- Strong balance sheet and liquidity (3.27x current ratio, 0.45x D/E, 27.3x coverage)
HQY Stock Risks: Healthequity, Inc.. Investment Risks
- Severely depressed returns on equity and assets (ROE 3.4%, ROA 2.1%) despite high profitability margins indicate significant capital inefficiency or asset bloat
- Large debt burden of $942.7M represents 47% of equity and may reflect recent acquisitions or restructuring with integration risk
- Extremely high EPS growth (+125.7% YoY) appears unsustainable and likely driven by share buybacks or non-operating gains rather than organic earnings growth
- Asset base ($3.3B) significantly exceeds earnings generation capacity, raising questions about capital allocation discipline
- Interest-rate normalization could reduce custodial yields and margins
- Regulatory/plan design changes affecting HSAs and related services
- Execution and partner/employer concentration risks as scale increases
Key Metrics to Watch
- Free cash flow trend and FCF margin sustainability amid growth investments
- Return on equity and asset trends to assess whether capital efficiency improves post-acquisition integration
- Organic revenue growth isolation from any inorganic contributions
- Debt reduction progress and refinancing risk given $942.7M long-term debt outstanding
- Custodial yield/net interest income
- Revenue growth (YoY)
Healthequity, Inc.. (HQY) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The 27.4% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments. Strong liquidity with a 3.44x current ratio provides a solid financial cushion.
HQY Profit Margin, ROE & Profitability Analysis
HQY vs Services Sector: How Healthequity, Inc.. Compares
How Healthequity, Inc.. compares to Services sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Healthequity, Inc.. Stock Overvalued? HQY Valuation Analysis 2026
Based on fundamental analysis, Healthequity, Inc.. has mixed fundamental signals relative to the Services sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Healthequity, Inc.. Balance Sheet: HQY Debt, Cash & Liquidity
HQY Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Healthequity, Inc..'s revenue has grown significantly by 74% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.64 reflects profitable operations.
HQY Revenue Growth, EPS Growth & YoY Performance
HQY Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2027 | $330.8M | $53.9M | $0.61 |
| Q3 2026 | $300.4M | $5.7M | $0.06 |
| Q2 2026 | $299.9M | $35.8M | $0.40 |
| Q1 2026 | $287.6M | $28.8M | $0.33 |
| Q3 2025 | $249.2M | $5.7M | $0.06 |
| Q2 2025 | $243.5M | $10.6M | $0.12 |
| Q1 2025 | $244.4M | $4.1M | $0.05 |
| Q3 2024 | $216.1M | -$1.6M | $-0.02 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Healthequity, Inc.. Dividends, Buybacks & Capital Allocation
HQY SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Healthequity, Inc.. (CIK: 0001428336)
📋 Recent SEC Filings
❓ Frequently Asked Questions about HQY
What is the AI rating for HQY?
Healthequity, Inc.. (HQY) has a Combined AI Grade of A from Claude (A) and ChatGPT (A) with 79% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are HQY's key strengths?
Claude: Exceptional profitability: 72.3% gross margin and 29% operating margin reflect strong pricing power and operational leverage. Outstanding free cash flow generation: 27.4% FCF margin with minimal capex shows asset-light, cash-generative business model. ChatGPT: High and improving profitability (24.6% operating margin, 16.4% net margin). Exceptional cash generation and minimal capex (34.7% FCF margin).
What are the risks of investing in HQY?
Claude: Severely depressed returns on equity and assets (ROE 3.4%, ROA 2.1%) despite high profitability margins indicate significant capital inefficiency or asset bloat. Large debt burden of $942.7M represents 47% of equity and may reflect recent acquisitions or restructuring with integration risk. ChatGPT: Interest-rate normalization could reduce custodial yields and margins. Regulatory/plan design changes affecting HSAs and related services.
What is HQY's revenue and growth?
Healthequity, Inc.. reported revenue of $354.6M.
Does HQY pay dividends?
Healthequity, Inc.. does not currently pay dividends.
Where can I find HQY SEC filings?
Official SEC filings for Healthequity, Inc.. (CIK: 0001428336) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is HQY's EPS?
Healthequity, Inc.. has a diluted EPS of $0.82.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is HQY's fundamental grade?
Based on our AI fundamental analysis in June 2026, Healthequity, Inc.. has a A grade with 79% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is HQY stock overvalued or undervalued?
Valuation metrics for HQY: ROE of 3.4% (sector avg: 16%), net margin of 19.6% (sector avg: 10%). Compare these metrics with sector averages to assess valuation.
What is HQY's AI grade for 2026?
Our dual AI analysis gives Healthequity, Inc.. a combined A grade for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is HQY's free cash flow?
Healthequity, Inc..'s operating cash flow is $97.5M, with capital expenditures of $362.0K. FCF margin is 27.4%.
How does HQY compare to other Services stocks?
Vs Services sector averages: Net margin 19.6% (avg: 10%), ROE 3.4% (avg: 16%), current ratio 3.44 (avg: 1.5).