HealthEquity Stock Sees Biggest Drop In Over 3 Years On Disappointing Outlook — Retail Doesn't Feel It's All Doom And Gloom
CFO James Lucania said on the earnings call that fraud prevention efforts are ongoing, and service expenses are expected to remain elevated through the first half of fiscal 2026.
FollowShares of HealthEquity, Inc. fell more than 17% on Wednesday, registering the worst drop since December 2021, after the health-savings account custodian projected near-term earnings that fell below Wall Street's estimates.
After Tuesday's market hours, the company reported fourth-quarter revenue of $311.82 million, above a consensus estimate of $305.82 million.
However, adjusted earnings per share of $0.69 was worse than the expected $0.72.
HealthEquity's gross profit margin slipped to 61% from 62% a year earlier due to an additional $17 million in service costs, primarily for system consolidation of card processing and fraud management in member accounts.
CFO James Lucania said on the earnings call that fraud prevention efforts are ongoing, and service expenses are expected to remain elevated through the first half of fiscal 2026 before stabilizing later in the year.
The Draper, UT-based company forecasted fiscal 2026 adjusted earnings of $3.57 to $3.74 per share, with the midpoint falling below analysts' expectations of $3.71.
It also projected revenue between $1.28 billion and $1.31 billion, compared to Wall Street's consensus estimate of $1.3 billion.
On Stocktwits, sentiment for HealthEquity ended on an 'extremely bullish' note on Wednesday, accompanied by an 83% jump in message volume. The stock was in the green during Wednesday’s extended trading.
HQY sentiment and message volume as of March 19. | source: Stocktwits
One user believes the stock will be back to over $100 by the end of the week, suggesting that only the narrow EPS miss was a sore point.
Another user said the news was "not as bad as I imagined."
A Citizens JMP analyst on Wednesday cut HealthEquity's price target to $110 from $120, while maintaining an 'Outperform' rating, citing the near-term profitability pressures from fraud-related expenses.
However, the research firm said it remains positive about HealthEquity's outlook, citing new product launches, tech innovations to improve member experience and reduce service costs, and potential market expansion from regulatory or legislative changes.
CEO Scott Cutler said the company added "a record one million" new HSAs (health-savings accounts) from sales in its fiscal 2024.
HealthEquity stock is down over 12% year-to-date.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
subscribe to Asianet Newsable WhatsApp channel by clicking here.
